NISM Series XV : Research Analyst Certification Exam Notes
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Financing cash flows - Cash flows on account of liabilities (B/S items). Borrowing money or issuing/expanding equity is positive cash flow and redeeming debt and/or equity is negative cash flow.
Contingent Liabilities are liabilities that may be incurred by an entity depending on the outcome of an uncertain future event.
Off-Balance Sheet Items: Simply stating, any asset or liability that does not appear on a company's balance sheet is an off-balance sheet item. For example, loans taken are part of liability in the books of the company, operating lease, which is an alternative way of financing an asset is an off-balance sheet item. Contingent liabilities, as defined above, are also off-balance sheet items
Profitability Ratios - EBITDA Margin and Net Profit Margin (NPM) or Profit After Tax margin (PAT margin).
EBITDA Margin = EBITDA / Net Sales. A firm with a higher EBITDA margin, indicates that it is able to operate with greater efficiency than other peer group companies. The EBITDA margins are useful in identifying profitability trends in an industry since it is not affected by the depreciation policies, funding decisions and taxation rates of the companies.
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