Chapter 2 - More Financial Statements

Front 1

Cash Debt Coverage Ratio:

Back 1

A measure of solvency that is calculated as cash provided by operating activities divided by average total liabilities

Front 2

Classified Balance Sheet:

Back 2

A balance sheet that contains a number of standard classifications or sections.

Front 3

Comparability:

Back 3

Ability to compare the accounting information of different companies because they use the same accounting principles.

Front 4

Conservatism:

Back 4

The approach of choosing an accounting method, when in doubt, that will least likely overstate assets and net income.

Front 5

Consistency:

Back 5

Use of the same accounting principles and methods from year to year within a company.

Front 6

Current Assets:

Back 6

Cash and other resources that are reasonably expected to be converted to cash or used up by the business within on year of the operating cycle, whichever is longer.

Front 7

Current Cash Debt Coverage Ratio:

Back 7

A measure of liquidity that is calculated as cash provided by operating activities divided by average current liabilities.

Front 8

Current Obligations:

Back 8

Obligations reasonably expected to be paid within the next year or operating cycle, whichever is longer.

Front 9

Current Ratio:

Back 9

A measure used to evaluate a company's liquidity and short-term debt-paying ability, computed by dividing current assets by current liabilities.

Front 10

Debt to Total Assets Ratio:

Back 10

Measures the percentage of total financing provided by creditors; computed by dividing total debt by total assets.

Front 11

Earnings Per Share (EPS):

Back 11

A measure of the net income earned on each share of common stock; computed by dividing net income minus preferred stock dividends by the average number of common shares outstanding during the year.

Front 12

Financial Accounting Standards Board (FASB):

Back 12

A private organization that established generally accepted accounting principles.

Front 13

Generally Accepted Accounting Principles (GAAP):

Back 13

A set of rules and practices, having substantial authoritative support, that are recognized as a general guide for financial reporting purposes.

Front 14

Intangible Assets:

Back 14

Assets that do not have physical substance.

Front 15

Liquidity:

Back 15

The ability of a company to pay obligations that are expected to become due within the next year of operating cycle.

Front 16

Liquidity Ratios:

Back 16

Measures of the short-term ability of the company to pay its maturing obligations and to meet unexpected needs for cash.

Front 17

Long-Term Investments:

Back 17

Generally, investments in stocks and bonds of other companies that are normally held for many years. Also includes long-term assets, i.e. land & buildings, not currently being used in the company's operations.

Front 18

Long Term Liabilities/Debts:

Back 18

Obligations not expected to be paid within one year or the operating cycle.

Front 19

Materiality:

Back 19

The constraint of determining whether an item is large enough to likely influence the decision of an investor or creditor.

Front 20

Operating Cycle:

Back 20

The average time required to go from cash to cash in producing revenues.

Front 21

Price-Earning(P-E)Ratio:

Back 21

A measure of the ratio of the market price of each share of common stock to the earnings per share; it reflects the stock market's belief about a company's future earnings potential.

Front 22

Profitability Ratios:

Back 22

Measures of the income or operating success of a company for a given period of time.

Front 23

Property, Plant and Equipment:

Back 23

Assets of a relatively permanent nature that are being used in the business and are not intended for resale.

Front 24

Ratio:

Back 24

An expression of the mathematical relationship between one quantity and another; may be expressed as a percentage, rate, or a proportion.

Front 25

Ratio Analysis:

Back 25

A technique for evaluating financial statements that expresses the relationship among selected financial statement data.

Front 26

Relevance:

Back 26

The quality of information that indicates the information makes a difference in a decision.

Front 27

Reliability:

Back 27

The quality of information that gives assistance that it is free of error and bias.

Front 28

Securities and Exchange Commission (SEC):

Back 28

The agency of the US government that oversees US financial markets and accounting standards-setting bodies.

Front 29

Solvency:

Back 29

The ability of a company to pay interest as it comes due and to repay the face value of debt at maturity.

Front 30

Solvency Ratios:

Back 30

Measures of the ability of the company to survive over a long period of time.

Front 31

Statement of Stockholders' Equity:

Back 31

A financial statement that presents the factors that caused stockholders' equity to change during the period, including those that caused retained earnings to change.

Front 32

Working Capital:

Back 32

The difference between the amount of current assets and current liabilities.