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29 Cards in this Set
- Front
- Back
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Operating
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Cash Flow section including day-to-day expenses and revenues
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Investing
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Cash Flow section including buying/selling land, equipment, and buildings
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Financing
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Cash Flow section including bank loans, stock, and dividends
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Price Earnings Ratio
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Market Price of Company/NI or Price per Share/Earnings per Share
Estimates value of company |
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Total Assets Turnover Ratio
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Sales Revenue/Average Total Assets
Sales per dollar of assets; company's effectiveness at controlling assets |
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Financial Leverage Ratio
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Average Total Assets/Average Stockholders' Equity
1 = no risks; SE = A 2> x >1 = Takes some risk but still less liabilities than SE 2 or + = risky company; lots of liabilities |
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Earnings per Share
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Net Income/Weighted Average of Common Shares Outstanding
Located on Income Statement |
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Net Profit Margin
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Net Income/Net Sales (Operating Revenue)
Measures effectiveness of management at generating profit on every dollar of sales |
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Economic Entity Assumption
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the company is its own entity
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Going Concern (Continuity) Assumption
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the company will continue in the future
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Monetary Measure Assumption
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unit of measure
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Time Period Assumption
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the life of businesses can be broken up into shorter time periods
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Historical Cost Principles
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something is recorded at what we paid for it (usually land)
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Revenue Recognition
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revenue must be earned before recording
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Matching Principle
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Expenses are recognized in the same time period as revenues
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GAAP
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Generally Accepted Accounting Principles
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SEC
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Securities Exchange Commission in charge
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FASB
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Financial Accounting Standards Board; sets and enforces GAAP under the SEC
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AICPA
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American Institute of Certified Public Accountants; members must follow code of ethics
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PCAOB
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Public Companies Accounting Oversight Board; regulates auditors of public companies
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Relevance
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Primary Characteristic; Information that people need
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Reliability
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Primary Characteristic; Correct and verifiable information
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Comparability
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Secondary Characteristic; Format the same to compare companies
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Consistency
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Year after year the same procedure
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Operating Cycle
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Time it takes to purchase goods, pay suppliers, deliver goods, and collect money
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Accounting Cycle
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Transactions to financial statements
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Sole proprietorships
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One person; taxed once, unlimited liability; most of these
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Partnerships
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2 or more people; taxed once, limited or unlimited liability
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Corporations
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can sell stock on the market; taxed twice; limited liability
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