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28 Cards in this Set
- Front
- Back
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Debt to total assets ratio
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Measures the percentage of total financing provided by creditors; computed as total debt divided by total assets
debt to total assets ratio = total debt/total assets |
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Earnings per share (EPS)
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A measure of the net income earned on each share of common stock
EPS = (net income - preferred stock dividends)/(average # of common shares outstanding) |
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Economic entity assumption
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An assumption that economic events can be identified with a particular unit of accountability
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Financial Accounting Standards Board (FASB)
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The primary accounting standard-setting body in the United States
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Free cash flow
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Cash provided by operating activities adjusted for capital expenditures and dividends paid
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Full disclosure principle
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Accounting principle that dictates that companies disclose circumstances and events that make a difference to financial statements users
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Generally accepted accounting principles (GAAP)
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A set of rules and practices, having substantial authoritative support, that the accounting profession recognizes as a general guide for financial reporting purposes
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Going concern assumption
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The assumption that the enterprise will continue in operation for the foreseeable future
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Intangible asset
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Assets that do not have physical substance
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International Accounting Standards Board (IASB)
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An accounting standard-setting body that issues standards adopted by many countries outside of the united states
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Liquidity
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The ability of a company to pay obligations that are expected to become due within the next year or operating cycle
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Liquidity ratios
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Measures of the short-term ability of the company to pay its maturing obligations and to meet unexpected needs for cash
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Long-term Investments
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Investments in stockes and bonds of other companies that companies normally hold for many years. Also includes long-term assets, such as land and buildings, not currently being used in the company's operations
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Long-term liabilities (Long-term debt)
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Obligations that companies do not expect to pay within one year or the operating cycle
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Materiality
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The constraint of determining whether an item is large enough to likely influence the decision of an investor or creditor
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Monetary unit assumption
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An assumption that requires that only those things that can be expressed in money are included in the accounting records
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Operating Cycle
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The average time required to go from cash to cash in producing revenues
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Profitability ratios
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Measures of the income or operating success of a company for a given period of time
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Property, Plant, & Equipment
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Assets of a relatively permanent nature that companies use in the business and are not intended for resale
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Ratio analysis
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a technique for evaluating financial statements that express the relationship among selected financial statement data
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Relevance
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The quality of information that indicates the information makes a difference in a decision
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Reliability
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The of information that gives assurance that it is free of error or bias
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Securities and Exchange Commission (SEC)
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A U.S. government agency that oversees U.S. financial markets and accounting standard-setting bodies
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Solvency
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The ability of a company to pay interest as it comes due and to repay the face value of debt at maturity
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Solvency ratios
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Measures of the ability of the company to survive over a long period of time
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Statement of stockholders' equity
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A financial statement that presents the factors that caused stockholders' equity to change during the period, including those that caused retained earnings to change
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Time period assumption
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An assumption that the life of a business can be divided into artificial time periods and that useful reports covering those periods can be prepared for the business
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Working capital
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The difference between the amounts of current assets and current liabilities
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