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24 Cards in this Set
- Front
- Back
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Horizontal Analysis
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The change in an account from year to year. The difference is shown in a dollar amount and a % of the earlier year.
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Vertical Analysis
(common-size statement) |
Shows the relationship of an account to the total within a sigle statement.
Vertical Analysis of Income Statement: Revenues = % of net revenues Expenses = % of net revenues Vertical Analysis of Balance Statement: Assets = % of total assets Liabilities & SE = % total liab. & SE |
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Working Capital
(solvency analysis) |
The ability to meet current maturing obligations.
Current Assets - Current Liabilities |
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Current Assets
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Cash
Accounts Receivables Marketable Securities Prepaid Expense Inventory |
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Quick Assets
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Cash
Accounts Receivable Marketable Securities Prepaid Expense |
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Current Ratio
(solvency analysis) |
The ability to meet current maturing obligations.
Current Assets / Current Liabilities |
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Quick Ratio
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To indicate instant debt-paying ability
Quick Assets / Current Liabilities |
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Accounts Receivable Turnover
(solvency analysis) |
To assess the efficiency in collecting receivables and in the management of credit.
Net Sales / Avg. AR |
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Number of Days' Sales in Receivables
(solvency analysis) |
To assess the efficiency in collecting receivables and in the management of credit.
Avg. AR / Avg. Daily Sales Avg. Daily Sales = Net Sales / 365 |
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Inventory Turnover
(solvency analysis) |
To assess the efficiency in the management of inventory.
COGS / Avg. Inventory |
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Number of Days' Sales in Inventory
(solvency analysis) |
To assess the efficiency in management of inventory.
Avg. Inventory / Avg. Daily COGS |
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Ratio of Fixed Assets to Long-Term Liabilities
(solvency analysis) |
To indicate the margin of safety to long-term creditors.
Fixed Assets (net) / Long-Term Liabilities |
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Ratio of Liabilities to Stockholders' Equity
(solvency analysis) |
To indicate the margin of safety to creditors.
Total Liabilities / Total SE |
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Number of Times Interest Charges Earned
(solvency analysis) |
To assess the risk to debtholders in terms of number of times interest charges were earned.
(Income B4 Income Tax + Interest Expense) / Interest Expense |
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Ratio of Net Sales to Assets
(profitability analysis) |
To assess the effectiveness in the use of assets.
Net Sales / Avg. Total Assets (excluding long-term investments) |
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Rate Earned on Total Assets
(profitability analysis) |
To assess the profitability of the assets.
(Net Income + Interest Expense) / Avg. Total Assets |
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Rate Earned on Stockholders' Equity
(profitability analysis) |
To assess the profitability of the investment by stockholders
Net Income / (Avg. Total SE) |
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Rate Earned on Common SE
(profitability analysis) |
To assess the profitability of the investment by common stockholders
(net income - preferred dividends) / avg. common SE |
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Earnings per Share on Common Stock
(profitability analysis) |
To assess the profitability of the investment by common stockholders
(net income - preferred dividends) / share of common stock outstanding |
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Price-Earnings Ratio
(profitability analysis) |
To indicate future earnings prospects, based on the relationship between market value of common stock and earnings
(market price per share of common stock) / (earnings per share of common stock) |
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Dividends per Share of Common Stock
(profitability analysis) |
To indicate the extent to which earnings are being distributed to common stockholders
Dividends / (shares of common stock outstanding) |
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Dividend Yield
(profitability analysis) |
To indicate the rate of return to common stockholders in terms of dividends
(dividends per share of common stock) / (market price per share of common stock) |
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# times interest is earned
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amount available to meet interest charges
÷ interest amt available to meet interest charges = net income + interest expense |
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Rate Earned on Total Assets
aka. return on assets |
amt available for interest charges /
average total assets -- profitability of assets |
