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39 Cards in this Set
- Front
- Back
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Who are the users of he financial statements?
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management, current and potential creditors and investors.
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What is a portfolio?
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a group of loans or investments.
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What are the standards of the financial statements?
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rule of thumb measures, industry norms, past performance of company (trend analysis) This is the best because its the strongest but it is last for accuracy.
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What is a form 10k?
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annual report
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What is a form 10Q?
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Quarterly report
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What is a form 8K?
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current report: major events.
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What is a liquidity ratio?
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Measures of the short-term ability of the enterprise to pay its maturing obligaions and meet unexpected needs for cash.
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What are solvency ratios?
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Measures of the ability of the enterprise to survive over a long period of time.
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What are profitability ratios?
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Measures of the income of the operating success of an enterprise for a given period of time.
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How do you calculate working capital?
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current assets-current liabilities
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How do you calculate current ratio?
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current assests / current liabilities ($)
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What is the acid test ratio?
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Measure of a very short term debt paying ability. (x.xx/1)
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How do you calculate the acid test raio?
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cash+marketable securities+current receivables/ current liabilites
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What is the accounts receivable turnover?
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measures efficincy in collecting accounts receivable and effectiveness of credit policies.
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What is the average collection period?
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Measure of time it takes to collect an average accounts receivable.
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What is inventory turnover?
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Shows how many times the average dollars invested in merchandise were sold during the year.
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What is days in inventory?
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(average sales period) indicates the average number of days taken to sell the entire inventory one time.
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What does the debt to equity ratio show?
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the relationship of debt financing (borrowed funds) to equity financing (funds provided by stockholders)-- a measure of leverage.
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What does the time interest earned ratio indicate?
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The protection creditors have from default on interest payments.
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What does he return on common stockholder's equity show?
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How much was earned for each dollar invested by shareholders.
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What does the return on assests measure?
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The amount earned on each dollar invested in assets.
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When does positive financial leverage occur?
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When a corporation is able to earn more on its assets than it pays in interest on debt.
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Debt is more effective source of positive leverage than preferred stock. Why?
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Interest on debt is tax deductible while preferred dividends are not tax deductible.
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What does the asset turnover ratio measure?
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How efficiently a company uses its assts to generate sales.
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What is the earnings per share?
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measure of the net income earned on each share of common stock. Published on the face of the income statement.
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That is the basic earnings per share equation?
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net income-preferred dividends/ weighted average common stock shares outstanding. ($/share)
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What is a complex capital structure?
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Includes preferred stock, bonds, or other securities that can be converted into common stock.
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Is the basic earnings per share or diluted earnings per share likely to be lower?
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yes
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What does the price earnings ratio measure?
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the relationship of the current market price of a sock to the company's earnings per share.
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What is the price earnings ratio?
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market price per share/ earnings per share
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What does the dividend payout ratio guage?
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the portion of current earnings being paid out in dividends.
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What is the dividend yield?
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expresses the current annual dividend as a percentage of the current market price of the stock.
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What is the dividend yield equation?
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dividends per share/ market price per sare
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What is beta?
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(market risk) the volatility of the price of a stock in relation to market as a whole.
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Whe higher the beta....
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the more volatile is the stock.
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Is a stock has a beta of 1.0...
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it has the same volatility as the market as a whole.
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A stock with a beta of less than 1.0...
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it is less volatile (less risky) than the general market.
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A beta above 1.0 indicates....
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a stock with more volatility than the general market.
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What is the book value per share?
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Measures the amount that would be distributed to holders of each share of common stock if all assets were sold at their balance sheet carrying amounts and if creditors were paid off.
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