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26 Cards in this Set
- Front
- Back
Income statement
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A financial statement showing a firm's revenues and expenses during a specified period.
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Balance sheet
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An accounting statement of a firm's financial position of a specified time.
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Statement of cash flows
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A financial statement showing a firm's cash receipts and cash payments during a specified period.
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Economic earnings
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The real flow of cash that a firm could pay out without impairing its productive capacity.
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Accounting earnings.
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Earnings of a firm as reported on its income statement.
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Return on equity (ROE)
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The ratio of net profits to common equity.
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Return on assets (ROA)
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Earnings before interest and taxes divided by total assets.
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DuPont system
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Decomposition of profitability measures into component ratios.
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Profit margin or return on sales
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The ratio of operating profits per dollar of sales (EBIT divided by sales).
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Total asset turnover (ATO)
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The annual sales generated by each dollar of assets (sales/assets).
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Interest coverage ratio or times interest earned
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A financial leverage measure arrived at by dividing earnings before interest and taxes by interest expense.
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Leverage ratio
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Measure of debt to total capitalization of a firm.
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Inventory turnover ratio
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Cost of goods sold divided by average inventory.
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Average collection period, or days receivables.
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Accounts receivables per dollar of daily sales.
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Current ratio
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Current assets/current liabilities.
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Quick ratio, or acid test ratio
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A measure of liquidity similar to the current ratio except for exclusion of inventories.
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Cash ratio
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Another liquidity measure. Ratio of cash and marketable securities to current liabilities.
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Market-to-book-value ratio
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Market price of a share divided by book value per share.
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Price-earnings ratio
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The ratio of a stock's price to its earnings per share. Also referred to as the P/E multiple.
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Earnings yield
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The ratio of earnings to price, E/P.
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Economic value aded, or residual income
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A measure of the dollar value of a firm's return in excess of its opportunity cost.
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LIFO
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The last-in first-out accounting method of valuing inventories.
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FIFO
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The first-in first-out accounting method of valuing inventories.
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Fair value or mark-to-market accounting
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Use of current market values rather than historic cost in the firm's financial statements.
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Quality of earnings
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The realism and sustainability of reported earnings.
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International financial reporting standards
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A principles-based set of accounting rules adopted by around 100 countries around the world including the European Union.
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