Final Exam

Business 1023 with Bouwman at University of Arkansas - Fayetteville

About this deck

By: Rachel Mooreland
Created: 2011-05-07
Size: 44 flashcards
Views: 70

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Accounts Receivable Analysis

A company's ability to collect its accounts receivable.

Accounts receivable turnover- relationship between sales and accounts receivable. Number of days' sales receivables (multiply by 365) the bigger the number the worse!

Common-Sized Statement

A financial statement in which all items are expressed only in relative terms.

Base everything off of sales or total assets. Percentage instead of dollar value

Take out the amounts from the vertical analysis and leave the percentages

Current Position Analysis

A company's ability to pay its current liabilities.

Current Ratio

A financial ratio that is computed by dividing current assets by current liabilities.

= Current Assets/Current Liabilities

Current Liabilities= Accounts payable

Earnings per share (EPS) on common stock

The profitability ratio of net income available to common shareholders to the number of common shares outstanding.

(Net income - Preferred Stock Dividends) / Average Shares of common stock outstanding

Horizontal Analysis

Financial analysis that compares an item in a current statement with the same item in prior statements.

Percent change

Inventory Analysis

A company's ability to manage its inventory effectively

Inventory turnover- relationship between the volume of goods (merchandise) sold and inventory

Cost of Goods sold/average inventory

Management's Discussion and Analysis (MD&A)

An annual report disclosure that provides management's analysis of the results of operations and financial condition.

Price-Earnings Ratio

Market price per share of common stock/ EPS of common stock; The ratio of the market price per share of common stock, at a specific date, to the annual earnings per share.

Profitability

The ability of a firm to earn income.

Quick Ratio/Acid Test Ratio

Cash, temporary investments, and accounts receivable (quickest conversion to CASH if needed) inventory is NOT

Rate earned on common stockholder's equity

A measure of profitability computed by dividing net income, reduced by preferred dividend requirements, by common stockholders' equity.

Rate earned on stockholder's equity (Return on Equity)

Net income/Average Total Equity ; A measure of profitability computed by dividing net income by total stockholder' s equity.

Rate earned on total assets (Return on assets)

(Net income + Interest Expense) /Average total assets; A measure of the profitability of assets, without regard to the equity of creditors and stockholders in the assets.

Ratio of liabilities to stockholders' equity

A comprehensive leverage ratio that measures the relationship of the claims of creditors to stockholder's equity.

Total Liabilities/Total Stockholders' Equity

The higher this, the more risky the company

Ratio of net sales to assets (Asset turnover)

Net Sales/Average Total Assets; Ratio that measures how effectively a company uses its assets, computed as net sales divided by average total assets.

Solvency

The ability of a firm to pay its debts as they come due.

Vertical Analysis

Focus on columns; shows each asset as percentage; An analysis that compares each item in a current statement with a total amount within in the same statement.

Percent Sales

Working Capital

Current Assets - Current Liabilities; The excess of the current assets of a business over its current liabilities.

Liquidating Dividend

We are going to use some of older retained earnings to pay out dividends; reducing some built up equity to pay out as cash

Cost of Merchandise Sold

The cost that is reported as an expense when merchandise is sold

Beginning of Year Inventory + Net Purchases - End of Year Inventory

Gross Profit

Sales minus the cost of merchandise sold.

Merchandise Inventory

Merchandise on hand (not sold) at the end of an accounting period.

Multiple-Step Income Statement

A form of income statement that contains several sections, subsections, and subtotals.

Sales

The total amount charged customers for merchandise sold, including cash sales and sales on account

Sales Returns and Allowances

From the seller's perspective, returned merchandise or an adjustment for defective merchandise

Sales Discounts

From the seller's perspective, discounts that a seller may offer the buyer for early payment.

Net Sales

Revenue received for merchandise sold to customers less any sales returns and allowances and sales discounts.

Purchases returns and allowances

From the buyer's perspective, returned merchandise or an adjustment for defective merchandise.

Purchases Discounts

Discounts taken by the buyer for early payment of an invoice.

Net Purchases

Determined when purchases returns and allowances and the purchases discounts are deducted from the total purchases.

Cost of Merchandise Purchased

The cost of net purchases plus transportation cost

Merchandise Available for Sale

The cost of merchandise available for sale to customers calculated by adding the beginning merchandise inventory to net purchases.

Periodic Inventory System

The inventory system in which the inventory records do not show the amount available for sale or sold during the period.

When you buy something purchases goes up

Perpetual Inventory System

The inventory system in which each purchase and sale of merchandise is recorded in an inventory account.

Dual transaction; always called inventory when being recorded

When you buy something inventory goes up

Income from Operations (Operating Income)

Revenues less operating expenses and service department charges for a profit or an investment center.

Selling expenses- Expenses that are incurred directly in the selling of merchandise.

Administrative Expenses (general expenses)

Expenses incurred in the administration or general operations of the business.

Other Income

Revenue from sources other than the primary operating activity of a business.

Other Expense

Expenses that cannot be traced directly to operations

Single-Step Income Statement

A form of income statement in which the total of all expenses is deducted from the total of all revenues

Report Form

The form of balance sheet with the liabilities and owner's equity sections presented below the assets section.

Temporary (nominal) Accounts

Dividends, fees earned, rent expense

Market Segment

A group of customers with similar buying patterns.

Material Cost

What MTBF Affects

About this deck

By: Rachel Mooreland
Created: 2011-05-07
Size: 44 flashcards
Views: 70

About StudyBlue

“I have been getting MUCH better grades on all my tests for school. Flash cards, notes, and quizzes are great on here. Thanks!”
Kathy