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29 Cards in this Set
- Front
- Back
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Loan Covenants
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terms of a loan agreement which, if broken, entitle the lender to renegotiate loan terms or force repayment.
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Three things that must exist for accounting fraud to occur
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Incentive Opportunity and Personality
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Sarbanes-oxley (SOX) act
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a set of regulations passed by congress in 2002 in an attempt to improve financial reporting and restore investor confidence
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To further improve financial reporting for public and some private companies take three additional steps.
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1. Enhance the financial statement format
2. obtain an independent audit 3. release additional financial information. |
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Comparative financial statements
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Report numbers for two or more time periods
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Single step income statements
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Reports net income by subtracting a single group of expenses from a single group of revenues.
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Material misstatements
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Large enough to influence the decisions of financial statement users
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Unqualified audit opinion
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Indicates that the financial statements are presented in accordance with GAAP
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Qualified audit opinion
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Indicates that either the financial statements do no follow GAAP or the auditors were not able to complete the tests needed to determine whether the financial statements follow GAAP
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Preliminary releases
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Take place a few weeks after the reporting period has ended. Released to new agencies.
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Quarterly report
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Supercondensed version of its annual report
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Files required to be submitted to the SEC
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Annual report on 10-K quarterly reports on Form 10-Q and current event report on Form 8-K
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International financial reporting standards IFRS
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accounting rules established by the international accounting standards board for use in over 100 countries around the world
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Time series analysis
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compares a company's results for one period to its own results over a series of time periods
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Cross section analysis
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Compares the results of one company with those of others in the same section of the industry
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Cross section analysis
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Compares the results of one company with those of others in the same section of the industry
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Cross section analysis
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Compares the results of one company with those of others in the same section of the industry
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Cross section analysis
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Compares the results of one company with those of others in the same section of the industry
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Cross section analysis
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Compares the results of one company with those of others in the same section of the industry
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Cross section analysis
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Compares the results of one company with those of others in the same section of the industry
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Cross section analysis
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Compares the results of one company with those of others in the same section of the industry
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Goal of ratio analysis
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get tot eh heart of how well a company performed given the resources it had available
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Debt to assets ratio
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Total Liabilities
----------------------- Total assets |
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What does the Debt-to-assets ratio tell you?
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The percentage of assets financed by debt
A higher ratio means greater financing risk |
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Asset turnover ratio
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Sales Revenue
---------------------- Average Total assets |
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Asset turnover ratio tells you
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how well assets are used to generate revenues
A higher ratio means greater efficiency |
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Net profit margin ratio
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Net Income
------------------ Sales Revenue |
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Net profit margin ratio tells you
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How well expenses are controlled
a higher ratio means better performance |
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Net profit margin ratio tells you
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How well expenses are controlled
a higher ratio means better performance |
