Are you guys studying the financial risk ratios that contain ELIE? I find them incredibly confusing.
I looked over but I will go in depth later… hopefully
what’s ELIE? I don’t recall seeing that in the financial risk ratios…
ELIE = estimated lease interest expense used in fixed financial cost raio and CF coverage of fixed financial costs. Those are variations of the interest coverage ratio, which recognize that firms using leased faciliies are essentially borrowing capital to lease the facilities. Probably not the most important ratios out there.
another acronym, i just remember them as lease interest expense… I don’t know, but personally, I think trying to remember all these acronyms and mnemonic is putting added stress on your self, for example for the fixed financial cost ratio, you know it includes leases, so you add lease expense back, that’s so easy to remember and makes a lot of sense
you’re right, liaaba. I try to memorize as little as possible. I’d rather take the time to think it through. Thanks for the clarification.
I find the ratios material to be incredibly confusing. With the exception of the efficiency and the majority of the profitability ratios,there’s no straightforward way to calculate most of the remaining ratios discussed in the book.Some analysts include deferred taxes,other don’t.Sometimes preferred stock is included,other times only common equity is used.I hope they really make it clear during the exam what we need to use because there could be more than one possibly correct answer depending on the analyst’s perspective. I don’t know,may be some of you level II-ers could shed some light on the subject