Financial Ratios (Flashcards)

This ratio results when the sum of a company’s cash + marketable securities + accounts receivable is divided by the company’s current liabilities.

This ratio results when total credit sales for a year are divided by the average amount of accounts receivable during the year.

This is the result of dividing 365 or 360 days by the accounts receivable turnover ratio.

This ratio results when the cost of goods sold for a year is divided by the average inventory during the year.

This is the result of dividing 365 or 360 days by the inventory turnover ratio.

This is calculated by subtracting the amount of current liabilities from the amount of current assets.

This word refers to a company’s ability to meet its current obligations.

This ratio is computed by dividing a company’s after tax net income during a year by the company’s average total assets during the same year.

This ratio is the result of dividing the net revenues (or net sales) of a year by the average total assets of the same year.

This ratio, which indicates financial leverage, is the amount of total liabilities in relation to the amount of stockholders’ (or owner’s) equity.

This ratio, which indicates financial leverage, is the amount of total liabilities divided by the amount of total assets.

This is the result of subtracting the cost of goods sold from net sales.

This is the result of dividing the amount of gross profit by the net sales.

This results when net income is divided by net sales.

This term implies using debt in order to acquire and control a greater amount of assets.

This type of analysis results in the income statement amounts shown as a percentage of net sales, and the balance sheet amounts shown as a percentage of total assets.

This type of analysis results in a multi-column financial report that shows the income statement and balance sheet amounts for many years as a percentage of the base year amounts.

This is a form of horizontal analysis in that the amounts from several years are expressed as a percentage of a base year amount.

This metric is a corporation’s net income (that is available for common stockholders) divided by the weighted average number of shares of common stock that were outstanding during the same period of time.

This significant item on a retailer’s income statement represents the cost of goods purchased adjusted for the change in inventory.

In financial ratios, this word means the total amount of a company’s liabilities.

This balance sheet amount is used for the amount of debt in ratios such as debt to equity.

This amount, which is the total of the first section of the statement of cash flows, is often compared to net income and is also used in computing a company’s free cash flow.

This is a judgement made after comparing 1) net cash provided by operating activities with 2) net income.

This results when sales discounts and sales returns and allowances are both subtracted from gross sales.

When a corporation has preferred stock, this amount is deducted from its net income.

This is an investment’s incremental income statement effect divided by the incremental balance sheet effect.

This results when a company’s capital expenditures are deducted from its cash flow from operating activities.

This section of the SEC Form 10-K provides an important narrative about the financial aspects of the corporation.

This U.S. government agency has regulatory power over 1) the U.S. stock exchanges, and 2) the reporting requirements of corporations with stock that is traded on those exchanges.

This type of balance sheet is related to vertical analysis since all amounts are shown as a percentage of total assets.

This type of income statement is related to vertical analysis since all amounts are shown as a percentage of net sales.

This cost flow assumption removes from inventory the most recent costs first and includes them in the cost of goods sold. During inflation this cost flow assumption will result in lower net income than FIFO.

This financial ratio results when a corporation’s 1) cash dividend per share of common stock is divided by 2) the earnings per share of common stock.

This value is equal to the amount of stockholders’ equity appearing on a corporation’s balance sheet. It is rarely the same as the corporation’s market value.

This is a corporation’s stockholders’ equity (excluding the book value of any preferred stock) divided by the number of shares of common stock outstanding.

This ratio results when 1) the market price of a share of common stock is divided by 2) the book value of a share of the common stock.

This term is used to describe a corporation’s capital stock when it is bought and sold on a stock exchange.

This is the result of dividing a corporation’s 1) income before interest and income tax expense by 2) the amount of interest expense.

This is the average time that it takes for a retailer’s (or manufacturer’s) cash to go into inventory and then return to cash.

This ratio is the result of dividing the market value of a share of common stock by its earnings per share for a year.

This is a common stock’s cash dividend per share for a year divided by the market price of one share.

This metric results when a corporation’s 1) earnings available for common stock for a year is divided by 2) the average book value of the common stock for the year.