FPAC Part I flashcards
FPAC Part I · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Gross profit margin
- Revenue minus cost of goods sold, divided by revenue. It shows profitability after direct production costs but before operating overhead such as selling and administration.
- Current ratio
- Current assets divided by current liabilities. It gauges short-term liquidity; a result below 1.0 indicates current obligations exceed current resources.
- Quick ratio
- Cash plus marketable securities plus receivables, divided by current liabilities. It excludes inventory and prepaid items because they convert to cash slowly.
- Free cash flow
- Operating cash flow minus capital expenditures. It represents cash remaining after maintaining and expanding the asset base, available for debt service, dividends, or reinvestment.
- Net present value
- Present value of expected cash inflows minus the initial investment, discounted at the cost of capital. A positive NPV supports accepting the project.
- Internal rate of return
- The discount rate at which a project's NPV equals zero. A project is acceptable when IRR exceeds the required hurdle rate.
- Break-even point
- Fixed costs divided by contribution margin per unit (price minus unit variable cost). It is the sales volume at which total revenues equal total costs.
- Times interest earned
- Earnings before interest and taxes divided by interest expense. A declining ratio signals reduced capacity to cover debt service from operating earnings.
- Cash conversion cycle
- Days inventory outstanding plus days sales outstanding minus days payables outstanding. A shorter cycle reduces the working capital tied up in operations.
- DuPont analysis
- Return on equity decomposed into net profit margin times asset turnover times equity multiplier, isolating profitability, efficiency, and leverage contributions.
- Vertical analysis
- Expressing each financial statement line as a percentage of a base amount, such as revenue on the income statement or total assets on the balance sheet.
- Horizontal analysis
- Computing period-over-period percentage change as current amount minus prior amount, divided by prior amount, to reveal trend direction and magnitude.
- Debt-to-equity ratio
- Total liabilities divided by total shareholders' equity. It measures financial leverage and indicates how much debt funds the business relative to owners' capital.
- Inventory turnover
- Cost of goods sold divided by average inventory. Higher turnover generally indicates efficient inventory use; days inventory equals 365 divided by turnover.
- Payback period
- The time required for cumulative cash inflows to recover the initial investment. It is simple but ignores all cash flows occurring after the payback point.
- Scenario analysis
- Varying several inputs together to model coherent alternative futures, such as base, upside, and downside cases, rather than changing one variable at a time.
- Contribution margin ratio
- Revenue minus variable costs, divided by revenue. It expresses the share of each sales dollar available to cover fixed costs and generate profit.
- Economic value added
- Net operating profit after tax minus invested capital multiplied by the cost of capital. Positive EVA means returns exceed the capital charge.
- Weighted average cost of capital
- The blended required return on a firm's capital, weighting after-tax cost of debt and cost of equity by their proportions in the capital structure.
- Working capital
- Current assets minus current liabilities. A positive balance indicates short-term resources exceed obligations due within one year.
- Operating margin
- Operating income divided by revenue. It measures profitability from core operations, excluding interest and non-operating or one-time items.
- Common-size cash flow analysis
- Expressing operating, investing, and financing cash flows as a percentage of revenue to compare cash generation patterns across periods or peer companies.
- Revenue recognition principle
- Revenue is recognized when control of a promised good or service transfers to the customer, measured at the consideration the entity expects to receive.
- Deferred revenue liability
- A liability recorded when a customer pays before the performance obligation is satisfied; revenue is recognized as the obligation is fulfilled over time.
- Data quality dimensions
- Attributes used to assess fitness of data, including accuracy, completeness, timeliness, consistency, and validity, each evaluated before data supports decisions.
- ETL versus ELT
- ETL transforms data before loading into the target store; ELT loads raw data first and transforms it inside the warehouse using its compute power.
- Data warehouse versus lake
- A warehouse stores structured, historized data for reporting; a lake holds raw structured and unstructured data at scale for flexible processing.
- Referential integrity
- A rule requiring each foreign key value to match an existing primary key in the related table, preventing orphaned records and inconsistent relationships.
- System of record
- The authoritative source for a given data element. Other systems holding copies reconcile to it, avoiding conflicting versions of the same fact.
- Data lineage
- A record tracing a data element from its origin through each transformation to the final report, supporting impact analysis and audit reconstruction.
- Recovery point objective
- The maximum tolerable data loss measured in time. It sets backup frequency requirements; recovery time objective separately defines tolerable downtime.
- Master data management
- Governance of shared reference entities such as customers, vendors, and accounts so that all systems use consistent identifiers and attributes.