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44 Cards in this Set

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  • Back
measures short term debt paying ability
current ratio

current assets/current liability
measures immediate short-term liquidity
quick or acid test ratio

(cash, marketable securities, and receivables (net))/Current Liabilites
Measures a company's ability to pay off its current liableities in a given year from its operations
Current Cash debt coverage ratio

Net cash provided by operating activities/avg current liablitites
measures liquitdity of receivables
receivables turnover

net sales/avg. trade receivables (net)
measures liquidity of inventory
inventory turnover

cost of goods sold/avg. inventory
Measures how effeciently assets are used to generate sales
Asset turnover

Net sales/avg total assets
Measures net income generated by each dollar of sales
Profit Margin on Sales

Net income/Net Sales
Measures overall profitability on assets
Rate of return on assets

Net income/Avg total Assets
Measures Profitibilty of owner's investment
Rate of return on common stock equity

(Net income - preferred dividends)/Avg. common stockholders equity
Measures net income earned on each share of common stock
Earnings per Share

(Net income - preferred dividends)/weighted shares outstanding
Measures the ratio of the market price per share to earnings per share
price earnings ratio

market price of stock/earnings per share
Measures the percentage of earnings distributed in the form of cash dividends
Payout ratio

Cash dividends/net income
Measures the percentage of total assets provided by creditors
debt to total assets

Total debt/total assets or equities
Measures the ability to meet interest payments as they come due
Times interest earned

income before interest charges and taxes/interest charges
Measures a company's ability to repay its total liabilites in a given year from its operations
Cash debt coverage ratio

Net cash provided by operating activities/average total liablities
Measures the amount each share would recieve if the company were liquidated at the amounts reported on the balance sheet
Book value per share

common stockholders' equity/outstanding shares
account form
lists assets by sections on the left side, and liabilities and stockholders' equity on the right side
adjunct account
increases either an asset liablity or owners equity account
available for sale securities
debt securites that the enterprise has the positive intent and ability to hold to maturity
balance sheet
statement of financial position, reports the assets, liablities, and stockholders equity on a specific date
cash debt coverage ratio
indicates a company's ability to repay its liabilites from net cash provided by operating activities without having to liquidate assets
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
contra account
an item that reduces either an asset, liability or owner's equity account
current assets
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
current cash debt coverage ratio
indicates whether the company can pay off its current liablities in a given year from its operations
current liablities
are the obligations that are reasonably expected to be liquidated either through the use of current assets or the creation of other current liablities
financial flexibility
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
financial instruments
cash, an ownership interest, or a contractual rights to recieve or obligation to deliver cash or another financial instrument
financing activities
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
free cash flow
net cash provided by operating activities less capital expenditures and dividends - the amount of discretionary cash flow a company has for purchasing additional investments
held to maturity securities
debt securities that the enterprise has the positive intent and ability to hold to maturity
intangible assets
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
investing activities
include making and collecting loans and aquiring and disposing of investments (both debt and equity) and property, plant and equipment
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
long-term investments
investments in:
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
long-term liabilities
obligations that are not reasonably expected to be liquidated within the normal operating cycle but are payable at some date beyond that time
operating activities
involve the cash effects of transactions that enter into the determination of net income
owners' (stockholders' equity)
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)
property, plant, and equipment
properties of a durable nature used in the regular operations of the business
report form
lists liablities and stockholders equity directly below assets on the same page on the balance sheet
refers to the ability of an enterprise to pay its debys as they mature
statement of cash flows
provides relevant information about the cash receipts and cash payments of an enterprise during a period

-cash effects of operations during a period
-investing transactions
-financing transactions
-the net increase or decrease in cash during the period
trading securities
debt and equity securites bought and held primarily for sale in the near term to generate income on short-term price differences
working capital
the excess of total current assets over total current liabilities