Analysing financial statements
6 important questions on Analysing financial statements
Fair value accounting
Average tax rate
calculates percentage of total income that goes directly paying taxes
Marginal tax rate
the more money earned, the more tax
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NCF = CF(O) +CF (I) + CF (F)
-CF(O)= operating cash flow, current assets and liabilities (through business activities)
-CF(I) = investing cash flow: changes in any non current assets
-CF(F) = financing cash flow, measures changes in equity and long term liabilities
Free cash flow/total cash flow of firm
cash flows give more info about financial condition than income statement
Times interest earned (TIE) ratio
TIE ratio = EBIT (operating income) / interest expense
EBIT = earnings before interest and taxes
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