Vocabulary
Chapter 16
Chapter 17
Ratio
Mystery
100
Method that begins with Revenues
What is Direct Method
100
Retirment of bonds payable is which type of cash flow?
What is financing
100
PE17-1A
What is Accounts payable $14,000 increase ($114,000 – $100,000), or 14% Long-term debt $13,000 increase ($143,000 – $130,000), or 10%
100
SOmetimes called fixed charge coverage ratio
What is number of times interest charges are earned
100
What is the pie and put it on board
What is ask teacher she will show you
200
Easily converted assets into cash are known as?
What is quick assets
200
PE 16-2A
Net income....................................................$150,500 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation............................ 10,500 Amortization of patents .............3,850 Loss from sale of land .............. 5,600 Net cash flow from operating activities ............................................ $170,450
200
PE17-2A
What is Amount Percentage Sales $680,000 100% ($680,000 ÷ $680,000) Gross profit 231,200 34 ($231,200 ÷ $680,000) Net income 74,800 11 ($74,800 ÷ $680,000)
200
EPS stands for
What is Earnings per share on common stock
200
PE 17-7A
What is Number of Times Interest Charges Are Earned = (Income Before Income Tax + Interest Expense) ÷ Interest Expense Number of Times Interest Charges Are Earned = ($4,000,000 + $500,000) ÷ $500,000 Number of Times Interest Charges Are Earned = 9.0
300
The viewpoint of this method recognizes that any change in balance sheet can be analyzed in terms of change in the other balance sheet accounts.
What is indirect method
300
PE16-4A
What is Net income...................................... $138,000 Adjustments to reconcile net income to net cash flow from operating activities: Changes in current operating assets and liabilities: Decrease in accounts receivable.......................................... 4,500 Increase in inventory .........................(2,100) Increase in accounts payable ............................................... 1,650 Net cash flow from operating activities ............................................ $142,050 Note: The change in dividends payable impacts the cash paid for dividends, which is disclosed under financing activities.
300
PE17-3A
What is a. Current Ratio = Current Assets ÷ Current Liabilities Current Ratio = ($200,000 + $100,000 + $60,000 + $100,000) ÷ $200,000 Current Ratio = 2.3 b. Quick Ratio = Quick Assets ÷ Current Liabilities Quick Ratio = ($200,000 + $100,000 + $60,000) ÷ $200,000 Quick Ratio = 1.8
300
Dividends oer share of common stock over market price per share of common stock is called
What is Dividend Yield
300
PE 16-7a
What is Cost of merchandise sold .................................................................. $360,000 Deduct decrease in inventories ......................................................... (28,000) Add decrease in accounts payable.................................................... 17,800 Cash paid for merchandise ................................................................ $349,800
400
The focus on a comapnies ability to earn profits is known as ?
What is profitability analysis
400
PE16-6A
What is Sales....................................... $450,000 Deduct increase in accounts receivable ............................... (47,000) Cash received from customers.................................$403,000
400
PE17-5A
What is a. Inventory Turnover = Cost of Goods Sold ÷ Average Inventory Inventory Turnover = $880,000 ÷ $110,000 Inventory Turnover = 8.0 b. Number of Days’ Sales in Inventory = Average Inventory ÷ Average Daily Cost of Goods Sold Number of Days’ Sales in Inventory = $110,000 ÷ ($880,000 ÷ 365) = $110,000 ÷ $2,411 Number of Days’ Sales in Inventory = 45.6 days
400
An estimate of sales in receivables is measured by
What is number of days sales in receivables
400
PE17-A
What is a. Ratio of Fixed Assets to Long-Term Liabilities = Fixed Assets ÷ Long-Term Liabilities Ratio of Fixed Assets to Long-Term Liabilities = $836,000 ÷ $380,000 Ratio of Fixed Assets to Long-Term Liabilities = 2.2 b. Ratio of Liabilities to Stockholders’ Equity = Total Liabilities ÷ Total Stockholders’ Equity Ratio of Liabilities to Stockholders’ Equity = $550,000 ÷ $500,000 Ratio of Liabilities to Stockholders’ Equity = 1.1
500
A companies ability to pay current liabilities?
What is Working Capital
500
PE16-8A
What is a. 2012 2011 Cash flow from operating activities ............. $210,000 $200,000 Less: Investments in fixed assets to maintain current production.......... 128,0001 144,0002 Free cash flow.................................. $ 82,000 $ 56,000 1 $160,000 × 80% 2 $180,000 × 80% b. The change from $56,000 to $82,000 indicates a favorable trend.
500
PE17-11A
What is a. Earnings per Share on Common Stock = (Net Income – Preferred Dividends) ÷ Shares of Common Stock Outstanding Earnings per Share = ($440,000 – $40,000) ÷ 50,000 Earnings per Share = $8.00 b. Price-Earnings Ratio = Market Price per Share of Common Stock ÷ Earnings per Share on Common Stock Price-Earnings Ratio = $100.00 ÷ $8.00 Price-Earnings Ratio = 12.5
500
Base is always either total assets or total liabilities & stockholders equity
What is vertical analysis of balance sheet
500
17-9A
What is Rate Earned on Total Assets = (Net Income + Interest Expense) ÷ Average Total Assets Rate Earned on Total Assets = ($820,000 + $80,000) ÷ $5,000,000 Rate Earned on Total Assets = $900,000 ÷ $5,000,000 Rate Earned on Total Assets = 18.0%
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