Financial Ratios
This ratio measures a company’s ability to pay its short-term debts
CURRENT RATIO
This financial statement shows a company's financial position at a specific point in time.
BALANCE SHEET OR STATEMENT OF FINANCIAL POSITION (SFP)
This term refers to a company's ability to meet its long-term financial obligations.
SOLVENCY
This analysis involves evaluating a company's financial statements to identify trends and patterns.
HORIZONTAL/TREND ANALYSIS
This are type of liabilities that do not due within a year.
NON-CURRENT LIABILITY
This ratio measures a company's debt relative to its equity.
DEBT-TO-EQUITY RATIO
This financial statement shows a company's revenues and expenses over a specific period.
INCOME STATEMENT
This term refers to the amount by which a company's assets exceed its liabilities or residual amount.
EQUITY
This section of a company's financial statement shows the inflows and outflows of cash.
CASH FLOW STATEMENT
This concept involves spreading the cost of a tangible asset over its useful life.
DEPRECIATION
This ratio measures a company's ability to pay its short-term debts with its liquid assets.
QUICK RATIO
This statement shows the inflows and outflows of cash and cash equivalents over a period of time.
CASH FLOW STATEMENT
This term refers to the amount of money owed to a company by its customers.
ACCOUNTS RECEIVABLE
This analysis involves comparing a company's financial performance over multiple periods.
TREND/HORIZONTAL ANALYSIS
This standard requires companies to report financial information in a consistent manner.
CONSISTENCY PRINCIPLE
This ratio measures a company's ability to generate earnings from its assets.
RETURN ON ASSETS or RETURN ON TOTAL ASSETS (ROA)
This financial statement shows the changes happened to the Equity at a specific period of time.
STATEMENT OF CHANGES IN OWNER'S EQUITY
This term refers to a company's obligation to pay a certain amount to shareholders.
DIVIDENDS
In an income statement, what is the base for common-size analysis?
Net Sales/Revenue.
This principle requires companies to record revenues and expenses in the same period they are earned or incurred.
MATCHING PRINCIPLES
This ratio measures how quickly a company sells its inventory. -
INVENTORY TURNOVER RATIO
What is the difference between operating income and net income?
Operating income excludes interest and taxes; net income includes them
Differentiate the debt financing as to equity financing
Debt requires repayment with interest; equity gives ownership and dividends
If operating expenses rise from 30% to 45% of sales, what does this imply?
Declining efficiency or cost control issues.
What is the difference between accrual accounting and cash accounting?
Accrual recognizes revenues/expenses when earned/incurred; cash recognizes when received/paid