Index
accounting rules, 2nd, 3rd, 4th
accounts payable, 2nd, 3rd, 4th
accounts receivable, 2nd, 3rd, 4th, 5th, 6th
accounts receivable days, 2nd, 3rd
accruals, 2nd
acid test
see also quick ratio
acquisition analysis
of impact of possible merger on earnings per share, 2nd, 3rd
of relative and absolute corporate values
of relative contributions of potential partners
of shareholder effects
use of profit and loss accounts in
acquisitions of companies, 2nd, 3rd
amortization, 2nd
annual returns from investment projects
annuities
future values of
present values of
appropriation account
arbitrage
Archer, Mary
Aristotle
asset backing
asset turn, 2nd;
see also ‘sales to total assets’ ratio
asset utilization, 2nd
assets
non-operating
overvaluation of
valuation of
see also current assets; fixed assets; total assets
assets per share (APS)
associated companies, sales to
audit
Austen, Jane
authorized share capital
backdating of revenue
Bagehot, Walter
balance sheet (B/S)
management of
manipulation of
profile of
relationship with profit and loss account
structure and layout of, 2nd
Bancroft, George
‘bears’
benchmarks
beta value, 2nd
‘big bath’ technique
‘bill and hold’ transactions
‘blue chips’
BMC Software
bogus sales
bonds, 2nd
bonus issues, 2nd
see also scrip issues
book value, 2nd, 3rd
see also ‘market to book’ ratio
borrowing ratio
break-even analysis, 2nd
break-even point, 2nd, 3rd, 4th
brewing industry
‘bullets’
‘bulls’
Burke, Edmund
‘call’ options
calls
capacity constraints
capital asset pricing model (CAPM), 2nd
capital employed (C/E), 2nd
capital expenditure
capital growth, 2nd, 3rd
capital leases
capital market
capital reserves, 2nd
capital structure
optimal
capitalized costs, 2nd
cash cycle, 2nd
cash flow
categories of
and contributions to cost or revenue
and depreciation
forecasts of, 2nd, 3rd
ideal pattern of
incremental
non-operating
per share
and trends in earnings
see also discounted cash flow
cash flow from operations (CFFO)
cash flow (C/F) statement, 2nd, 3rd, 4th, 5th
reconciliation of opening and closing balances in
cash holdings
cash shortages, 2nd, 3rd
caveat emptor
certificates of deposit
Chaucer, Geoffrey
chemicals industry
Churchill, Sir Winston
collateral
collection periods
commercial paper
common funds (US)
see also owners’ funds
‘common size’ financial statements
compensating balances
computer companies
conditional sales
consignment sales
consols
constant growth model
contingent liability
continuing value
see also terminal value
contra agreements
contribution
and profit
total, 2nd
contribution per unit (CPU), 2nd, 3rd
contribution per unit of capacity
‘contribution to sales’ percentage (CPS)
used for problem-solving
weighted
contributions of potential merger partners to earnings
conversion ratio
convertible loans
corporate valuation model
corporate value, 2nd, 3rd, 4th
relative and absolute
cost accounting
cost classification
cost of capital, 2nd
cost ratios
costs incurred
covenants, restrictive
credit control
creditors
see also accounts payable
creditworthiness
Crowther, Sir Geoffrey, 2nd
current assets (C/A), 2nd, 3rd, 4th
miscellaneous
current liabilities (CL), 2nd, 3rd, 4th
current ratio, 2nd
debentures
debt, definitions of
‘debt to equity’ ratio, 2nd, 3rd
importance of
methods of calculation
‘debt to total assets’ ratio, 2nd
debtor days, 2nd, 3rd
see also accounts receivable days
decision-making, information for, 2nd, 3rd
deferred tax, 2nd, 3rd
Defoe, Daniel
departmental ratios
depreciation, 2nd, 3rd, 4th, 5th
and cash flow
Dickens, Charles
dilution
discount factor, 2nd, 3rd, 4th, 5th, 6th
discounted cash flow (DCF), 2nd, 3rd
discounting and compounding tables
dividend cover, 2nd
by country and by sector
dividend per share (DPS), 2nd, 3rd
dividend yield, 2nd
drug manufacturers
earnings after tax (EAT)
earnings before interest and tax (EBIT), 2nd, 3rd, 4th, 5th, 6th
earnings before interest, tax, depreciation and amortization (EBITDA), 2nd, 3rd
earnings growth
earnings per share (EPS), 2nd
impact of a merger on, 2nd, 3rd
earnings yield, 2nd, 3rd
economic value added (EVA)
see also shareholder value added
employee ratios
ENRON
equity capital
cost of, 2nd
equity gearing
eurodollars
exchange rates, 2nd
excitement of business
expected future returns, 2nd
extraordinary items in accounts, 2nd
factoring
fictitious revenue, 2nd
finance leases, 2nd
financial accounting standards boards
financial engineering, 2nd
financial strength of a company
Fisher, Irving
fixed assets (F/A), 2nd, 3rd, 4th, 5th
revaluation of, 2nd
sale of
fixed costs, 2nd
floating rate notes
food manufacturing
foreign currency
forward cover
forward exchange rates
free borrowing percentage
funds
non-equity, 2nd
see also liabilities; sources and uses of funds
future value tables
futures contracts
gearing, 2nd
see also leverage
gilts
goodwill, 2nd, 3rd
government grants, 2nd
government securities, 2nd, 3rd
growth
opportunities and dangers of
prospects for
self-funding
see also constant growth model; earnings
growth equilibrium models
health care sector
hedging
holding companies
horizon period for SVA, 2nd
hurdle rate
inflation, 2nd
instalment sales
intangible assets, 2nd
integrity of financial accounts
interest charges
interest cover, 2nd
interest rates, 2nd, 3rd, 4th, 5th, 6th
average
risk-free, 2nd
internal rate of return (IRR), 2nd
inventories, 2nd, 3rd, 4th
inventory days, 2nd
invested capital (IC)
investment decisions
investment profiles
investments, 2nd
invoices for goods not yet ordered or not yet shipped
issued common stock, 2nd
Japanese companies, 2nd, 3rd, 4th
jargon
junk bonds
Keynes, John Maynard
leasing, 2nd, 3rd
leverage, 2nd, 3rd, 4th, 5th, 6th
see also operating leverage
leveraged buy-outs
liabilities, 2nd, 3rd
undervaluation of
see also contingent liability
liquidity, 2nd, 3rd, 4th
held in reserve
measures of, 2nd
loans
long-term, 2nd
repayment of, 2nd
short-term, 2nd
London InterBank Offered Rate (LIBOR)
‘long’ analysis, 2nd
long term, definition of
long-term contracts, revenue for
long-term funds, 2nd
long-term loans (LTL), 2nd
Loughborough, Lord
machine hours as a constraint
management accounts
management information systems
management performance, measurement of
manipulation of accounts
‘margin of safety’ in break-even analysis
‘margin on sales’ percentage, 2nd
drivers of
sector values of
and volume changes
market capitalization, 2nd
market premium
‘market to book’ ratio, 2nd, 3rd
market value, 2nd, 3rd, 4th
market value added (MVA)
see also shareholder value added
market value weights
‘matching principle’ for sources and uses of funds, 2nd, 3rd
medium term, definition of
mining companies
minority interests, 2nd
‘mix’ of products
money market
mutually exclusive projects
net fixed assets
net operating profit after tax (NOPAT), 2nd
net present value (NPV), 2nd, 3rd, 4th, 5th
net working capital (NWC), 2nd
net worth (NW), 2nd
nominal value of company stock
notes to accounts, 2nd, 3rd
‘off-balance sheet’ borrowing
operating assets
operating cost, misreporting of
operating leases
operating leverage
operating performance
standards of
operating profit, model of
operating revenue, enhancement of
opportunity cost
options
ordinary funds
see also owners’ funds
over the counter (OTC) trading
overheads
overtrading, 2nd, 3rd
overvaluation of assets
owners’ funds (OF), 2nd, 3rd, 4th, 5th, 6th
‘paid borrowing’ percentage
par value, 2nd
payback analysis and payback period, 2nd
‘payments and receipts’ statement
payout ratio, 2nd
pension funds, 2nd
performance drivers
preference shares, 2nd
preferred creditors
premature revenue, 2nd
prepayments
present value (PV), 2nd, 3rd
tables of
price-earnings (P/E) ratio, 2nd, 3rd
price per share (PPS)
prime rate
pro forma statements
product mix
profiles of companies
see also investment profiles
profit
definition of
distribution of
profit after tax (PAT)
profit and loss (P/L) account, 2nd, 3rd
manipulation of
relationship with balance sheet
timing adjustments to
use in acquisition analysis
profit before interest and tax (PBIT)
profit before interest, tax and depreciation (PBITD)
profit before tax (PAT)
profit margin
profit to volume (PV) ratio
profitability index
project appraisal, 2nd, 3rd
property leasing companies
property values
proxy votes
public utility companies
‘put’ options
quick ratio, 2nd
Rappaport, Alfred
recognition of revenue
repurchase agreements
reserves
use and misuse of
see also capital reserves; revenue reserves
retained earnings (RE), 2nd, 3rd
return on assets (ROA), 2nd
return on capital
return on capital employed (ROCE), 2nd, 3rd
return on equity (ROE), 2nd, 3rd, 4th, 5th
geographical and sectoral analysis
importance of
and ‘market to book’ ratio
for whole economy
return on invested capital (ROIC), 2nd, 3rd
return on investment (ROI), 2nd, 3rd
return on net assets (RONA)
return on total assets (ROTA), 2nd, 3rd, 4th, 5th, 6th
components of
geographical and sectoral analysis, 2nd
revaluation of assets, 2nd
revenue enhancement
clues for detection of
revenue reserves, 2nd
reverse yield gap
rights issues
risk, financial, 2nd, 3rd, 4th, 5th, 6th, 7th
risk-free rate of interest, 2nd
Rubaiyat of Omer Khayyam
sales and leaseback agreements
sales capacity, limits to
‘sales to fixed assets’ ratio
international comparisons of
‘sales to inventories’ ratio
‘sales to total assets’ ratio, 2nd
drivers of, 2nd
sector values of
and volume changes
sales, fictitious
scrip issues, 2nd
seasonal variations
self-funding growth
senior debt
sensitivity analysis
share premium, 2nd
share values, 2nd
shareholder effects of company mergers
shareholder value added (SVA), 2nd, 3rd, 4th, 5th, 6th
shareholders’ funds
shares, exchange of
Shaw, George Bernard
‘short’ analysis, 2nd
short-term assets
short-term liabilities, 2nd
short-term loans (STL)
side-letters, use of
sources and uses of funds, 2nd
indirect calculation of
long and short analysis of
related to balance sheet
and reporting standards
special purpose entities (SPEs)
spontaneous accounts
spontaneous financing
standards of financial reporting
stock exchanges, 2nd, 3rd, 4th
stock market ratios
‘stuffed’ revenue
subordinated debt
subsidiary companies, 2nd
swaps
takeover bids, 2nd, 3rd
see also acquisition analysis
tangible assets
target values for ratios, 2nd
taxation
deferred, 2nd, 3rd
rates of
telecommunications sector
term loans
terminal value, 2nd, 3rd, 4th, 5th
time value of money
‘top line’ from accounts
total assets (TA), 2nd
Treasury stock
‘true and fair view’ principle
ultra vires acts
undervaluation of liabilities
underwriting
unit contribution
unit cost
V chart
value added tax (VAT)
value drivers, 2nd
variable costs, 2nd
vendor-funded sales
warrants
weighted average cost of capital (WACC), 2nd, 3rd, 4th
‘window-dressing’ of company accounts, 2nd
working capital (WC), 2nd
narrow definition of
see also net working capital
working capital cash flow
working capital days, 2nd
‘working capital to sales’ ratio, 2nd
yield calculations
Z-growth factor
zero coupon bonds