Intermediate Accounting Ch 5

Front 1

measures short term debt paying ability

Back 1

current ratio

current assets/current liability

Front 2

measures immediate short-term liquidity

Back 2

quick or acid test ratio

(cash, marketable securities, and receivables (net))/Current Liabilites

Front 3

Measures a company's ability to pay off its current liableities in a given year from its operations

Back 3

Current Cash debt coverage ratio

Net cash provided by operating activities/avg current liablitites

Front 4

measures liquitdity of receivables

Back 4

receivables turnover

net sales/avg. trade receivables (net)

Front 5

measures liquidity of inventory

Back 5

inventory turnover

cost of goods sold/avg. inventory

Front 6

Measures how effeciently assets are used to generate sales

Back 6

Asset turnover

Net sales/avg total assets

Front 7

Measures net income generated by each dollar of sales

Back 7

Profit Margin on Sales

Net income/Net Sales

Front 8

Measures overall profitability on assets

Back 8

Rate of return on assets

Net income/Avg total Assets

Front 9

Measures Profitibilty of owner's investment

Back 9

Rate of return on common stock equity

(Net income - preferred dividends)/Avg. common stockholders equity

Front 10

Measures net income earned on each share of common stock

Back 10

Earnings per Share

(Net income - preferred dividends)/weighted shares outstanding

Front 11

Measures the ratio of the market price per share to earnings per share

Back 11

price earnings ratio

market price of stock/earnings per share

Front 12

Measures the percentage of earnings distributed in the form of cash dividends

Back 12

Payout ratio

Cash dividends/net income

Front 13

Measures the percentage of total assets provided by creditors

Back 13

debt to total assets

Total debt/total assets or equities

Front 14

Measures the ability to meet interest payments as they come due

Back 14

Times interest earned

income before interest charges and taxes/interest charges

Front 15

Measures a company's ability to repay its total liabilites in a given year from its operations

Back 15

Cash debt coverage ratio

Net cash provided by operating activities/average total liablities

Front 16

Measures the amount each share would recieve if the company were liquidated at the amounts reported on the balance sheet

Back 16

Book value per share

common stockholders' equity/outstanding shares

Front 17

account form

Back 17

lists assets by sections on the left side, and liabilities and stockholders' equity on the right side

Front 18

adjunct account

Back 18

increases either an asset liablity or owners equity account

Front 19

available for sale securities

Back 19

debt securites that the enterprise has the positive intent and ability to hold to maturity

Front 20

balance sheet

Back 20

statement of financial position, reports the assets, liablities, and stockholders equity on a specific date

Front 21

cash debt coverage ratio

Back 21

indicates a company's ability to repay its liabilites from net cash provided by operating activities without having to liquidate assets

Front 22

contingency

Back 22

an existing situation involving uncertainty as to possible gain or loss that will ultimately be resolved when one or more future events occur or fail to occur

Front 23

contra account

Back 23

an item that reduces either an asset, liability or owner's equity account

Front 24

current assets

Back 24

cash and other assets expected to be converted to cash, sold, or consumed either in one year or in the operating cycle, whichever is longer

Front 25

current cash debt coverage ratio

Back 25

indicates whether the company can pay off its current liablities in a given year from its operations

Front 26

current liablities

Back 26

are the obligations that are reasonably expected to be liquidated either through the use of current assets or the creation of other current liablities

Front 27

financial flexibility

Back 27

measures the aility of an enterprise to take effective actions to alter the amounts and timing of cash flows so it can respond to unexpected needs and opportunities

Front 28

financial instruments

Back 28

cash, an ownership interest, or a contractual rights to recieve or obligation to deliver cash or another financial instrument

Front 29

financing activities

Back 29

involve liability or owners' equity items. They include a)obtaining resources from owners and providing them with a return on (and a return of) their investment and b)borrowing money from creditors and repaying the amounts borrowed

Front 30

free cash flow

Back 30

net cash provided by operating activities less capital expenditures and dividends - the amount of discretionary cash flow a company has for purchasing additional investments

Front 31

held to maturity securities

Back 31

debt securities that the enterprise has the positive intent and ability to hold to maturity

Front 32

intangible assets

Back 32

lack physical substance and are not financial instruments. They include patents, copyrights, franchises, goodwill, trademarks, tradenames, and secret processes. Limited life intangibles are written off over their useful lives, and indefinite life are assessed for impairment

Front 33

investing activities

Back 33

include making and collecting loans and aquiring and disposing of investments (both debt and equity) and property, plant and equipment

Front 34

liquidity

Back 34

the amount of time that is expected to elapse until an asset is realized or otherwise converted into cash or until a liability has been paid

Front 35

long-term investments

Back 35

investments in:
securities
tangible fixed assets not used in operations
set aside in special fund such as a sinking fund, pension fund, or plant expension fund.
The cash surrender value of life insurance is included here

Front 36

long-term liabilities

Back 36

obligations that are not reasonably expected to be liquidated within the normal operating cycle but are payable at some date beyond that time

Front 37

operating activities

Back 37

involve the cash effects of transactions that enter into the determination of net income

Front 38

owners' (stockholders' equity)

Back 38

consits of
CAPITAL STOCK(par or stated value of the shares issued)
ADDIITIONAL PAID IN CAPTIAL( the excess of amounts paid in over the par or stated value)
RETAINED EARNINGS (the corporation's undistributed earnings)

Front 39

property, plant, and equipment

Back 39

properties of a durable nature used in the regular operations of the business

Front 40

report form

Back 40

lists liablities and stockholders equity directly below assets on the same page on the balance sheet

Front 41

solvency

Back 41

refers to the ability of an enterprise to pay its debys as they mature

Front 42

statement of cash flows

Back 42

provides relevant information about the cash receipts and cash payments of an enterprise during a period

reports:
-cash effects of operations during a period
-investing transactions
-financing transactions
-the net increase or decrease in cash during the period

Front 43

trading securities

Back 43

debt and equity securites bought and held primarily for sale in the near term to generate income on short-term price differences

Front 44

working capital

Back 44

the excess of total current assets over total current liabilities