Definitions
How a firm’s money, banking, investments, and credit are managed
What is Financing?
The recording, classifying, summarizing, and interpreting of financial events and transactions to provide management and other interested parties the information they need to make good decisions.
What is accounting?
Analysis of published accounts to assess the position of the organization
Stock in a firm (usually expressed in shares), which represents the owners’ rights to the value of the firm
What is Equity?
Statement of Financial Position (Includes long term assets and liabilities)
What is a Balance Sheet?
It measures success in turning assets to cash to pay debts
What are Liquidity Ratios?
A loan that the firm needs to pay back at a given time with an interest
What is Debt?
Statement of Revenues & Expenses
What is an Income Statement?
A measure of reliance on borrowed funds
What are leverage ratios?
Loan issued by the firm and held by creditors
What is Bond?
Statement of Cash Receipts & Disbursements
What is a Statement of Cash Flows?
A measure of how successful a company is in using their resources to achieve profits
What are profitability ratios?
Rate of return that the firm needs to pay to capital providers
What is cost of capital?
Equals (Liabilities + Owner’s Equity) in the accounting equation.
What is Assets?
A measure of how successful a company is in turning over inventory
What is inventory turnover ratio?