Bonds - bond is a debt security, similar to an IOU.

Borrowers issue bonds to raise money from

investors willing to lend them money for a certain amount of time.

Stocks - are a type of security that gives stockholders a share of ownership in a company.
Stocks also are called “equities.”

Debenture is a type of debt instrument that is not backed by any collateral and usually has a
term greater than 10 years. Debentures are backed only by the creditworthiness and reputation
of the issuer. Both corporations and governments frequently issue debentures to raise capital or
funds.

Treasury Bills or popularly known as T-Bills are peso-denominated short-term fixed income
securities issued by the Republic of the Philippines through its Bureau of Treasury.

Gross working capital is the sum total of all the current assets of a company, whereas net
working capital is the difference between the current assets and the current liabilities of a
company.

Financial analysis is the process of evaluating businesses, projects, budgets, and other
finance-related transactions to determine their performance and suitability.

Financial ratios are created with the use of numerical values taken from financial statements to gain
meaningful information about a company

Classification of financial ratios

1) profitability or return on investment;
2) liquidity;
3) leverage, and
4) operating or efficiency
Types of Ratio Analysis

1. Liquidity Ratios
- measure a company's ability to pay off its short-term debts as they become due, using the
company's current or quick assets. Liquidity ratios include the current ratio, quick ratio, and
working capital ratio.

2. Solvency Ratios
- Also called financial leverage ratios, solvency ratios compare a company's debt levels with its assets,
equity, and earnings, to evaluate the likelihood of a company staying afloat over the long haul, by
paying off its long-term debt as well as the interest on its debt. Examples of solvency ratios include:
debt-equity ratios, debt-assets ratios, and interest coverage ratios.

3. Profitability Ratios
- These ratios convey how well a company can generate profits from its operations. Profit margin,
return on assets, return on equity, return on capital employed, and gross margin ratios are all
examples of profitability ratios.

4. Efficiency Ratios
- Also called activity ratios, efficiency ratios evaluate how efficiently a company uses its assets and
liabilities to generate sales and maximize profits. Key efficiency ratios include: turnover ratio,
inventory turnover, and days' sales in inventory.

5. Coverage Ratios
- measure a company's ability to make the interest payments and other obligations associated with its
debts. Examples include the times interest earned ratio and the debt-service coverage ratio.

6. Market Prospect Ratios

- These are the most commonly used ratios in fundamental analysis. They include dividend yield, P/E
ratio, earnings per share (EPS), and dividend payout ratio. Investors use these metrics to predict
earnings and future performance.
What Are the Uses of Ratio Analysis?
Ratio analysis serves three main uses.
First, ratio analysis can be performed to track changes to a company over time to better understand
the trajectory of operations.
Second, ratio analysis can be performed to compare results with other similar companies to see how
the company is doing compared to competitors.
Third, ratio analysis can be performed to strive for specific internally-set or externally-set benchmarks.

Cash flow statement

- In financial accounting, a cash flow statement, also known as statement of cash flows, is a financial
statement that shows how changes in balance sheet accounts and income affect cash and cash
equivalents, and breaks the analysis down to operating, investing and financing activities
- A cash flow statement provides data regarding all cash inflows that a company receives from its
ongoing operations and external investment sources.

What are the 3 types of cash flow statements?

- cash flow from operating activities, cash flow from investing activities and cash flow from financing
activities. All three are included on a company's cash flow statement.
 The purpose of a cash flow statement is to provide a detailed picture of what happened to a
business's cash during a specified period, known as the accounting period. It demonstrates an organization's
ability to operate in the short and long term, based on how much cash is flowing into and out of the business.

What are the 2 methods of cash flow statement?

Direct method – Operating cash flows are presented as a list of ingoing and outgoing cash
flows. Essentially, the direct method subtracts the money you spend from the money you
receive.

Indirect method – The indirect method presents operating cash flows as a reconciliation from
profit to cash flow.

The indirect method uses net income as the base and converts the income into the
cash flow through adjustments.
The direct method only takes the cash transactions into account and produces the
cash flow from operations.

Operating activities are all the things a company does to bring its products and
services to market on an ongoing basis.
Non-operating activities are one-time events that may affect revenues, expenses or
cash flow but fall outside of the company's routine, core business.

Operating activities examples include:

● Receipt of cash from sales.

● Collection of accounts receivable.
● Receipt or payment of interest.
● Payment for materials and supplies.
● Payment of salaries.
● Payment of principal and interest for operating leases. ...
● Payment of taxes, fines, and license costs.
 Financing is the process of providing funds for business activities, making purchases, or
investing.
Investing is the act of distributing resources into something to generate income or gain profits.

Investing activities refer to earnings or expenditures on long-term assets, such as equipment

and facilities,
while financing activities are the cash flows between a company and its owners and creditors
from activities such as issuing bonds, retiring bonds, selling stock or buying back stock.

A corporate bond is a type of debt security that is issued by a firm and sold to investors. The company gets
the capital it needs and in return the investor is paid a pre-established number of interest payments at either
a fixed or variable interest rate.

There are five basic categories of corporate bonds:

● public utilities,
● transportations,
● industrials,
● banks and
● finance companies, and
● international issues.

The three categories of cash flows are operating activities, investing activities, and
financing activities.
● Operating activities include cash activities related to net income.
● Investing activities include cash activities related to noncurrent assets.
● Financing activities include cash activities related to noncurrent liabilities and
owners’ equity.