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12 Cards in this Set
- Front
- Back
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free cash flow |
Cash flow from operating activities, minus expenditures required to maintain the productive capacity of the firm, minus dividend payouts. |
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depreciation |
The allocation of the initial cost of an asset over its useful life. The annual expense of plant and equipment is matched against the revenues that are being produced. |
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cash flows from financing activities |
Cash flow that is generated (or reduced) from the sale or repurchase of securities or the payment of cash dividends. It is the third section presented in the statement of cash flows. |
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cash flows from investing activities |
Cash flow that is generated (or reduced) from the sale or purchase of long-term securities or plant and equipment. It is the second section presented in the statement of cash flows. |
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cash flows from operating activities |
Cash flow information that is determined by adjusting net income for such items as depreciation expense, changes in current assets and liabilities, and other items. It is the first section presented in the statement of cash flows. |
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statement of cash flows |
Formally established by the Financial Accounting Standards Board in 1987, the purpose of the statement of cash flows is to emphasize the critical nature of cash flow to the operations of the firm. The statement translates accrual-based net income into actual cash dollars. |
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net worth, or book value |
Stockholders' equity minus preferred stock ownership. Basically, net worth is the common stockholders' interest as represented by common stock par value, capital paid in excess of par, and retained earnings. If you take all the assets of the firm and subtract its liabilities and preferred stock, you arrive at net worth. |
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liquidity |
The relative convertibility of short-term assets to cash. Thus, marketable securities are highly liquid assets, while inventory may not be. |
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balance sheet |
A financial statement that indicates what assets the firm owns and how those assets are financed in the form of liabilities or ownership interest. |
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price-earnings ratio |
The multiplier applied to earnings per share to determine current value. The P/E ratio is influenced by the earnings and sales growth of the firm, the risk or volatility of its performance, the debt-equity structure, and other factors. |
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earnings per share |
The earnings available to common stockholders divided by the number of common stock shares outstanding. |
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income statement |
A financial statement that measures the profitability of the firm over a time period. All expenses are subtracted from sales to arrive at net income. |
