Accounting
What are the two types of accounting?
Cash and Accrual
What is the top line of the income statement?
Revenue
What operating expense item includes marketing costs, employee wages, and advertising costs?
SG&A
How is gross profit margin calculated?
(Revenue - COGS)/Revenue
What set of accounting rules do US companies follow?
Generally Accepted Accounting Principles (GAAP)
What is the bottom line of the income statement?
Net Income
What operating expense line item refers to costs related to improving existing products and developing new ones?
R&D
How is operating margin calculated
(Revenue - COGS - Operating Expenses)/Revenue
Under cash accounting, if Dell is paid $50,000 immediately for 25 laptops delivered this year and 25 laptops delivered next year, how much revenue would be recorded this year?
$50,000
What do you have to subtract to get from Revenue to Gross Profit?
Cost of Goods Sold (COGS)
What operating expense line item refers to the allocation of the cost of an asset over its useful life?
D&A
How is EBITDA margin calculated?
(Revenue - COGS - Operating Expenses + D&A)/Revenue
Under accrual accounting, if Dell is paid $50,000 immediately for 25 laptops delivered this year and 25 laptops delivered next year, how much revenue would be recorded this year?
$25,000
What do you have to subtract to go from operating income to net income?
Interest Expenses and Income Taxes
What type of assets amortize?
Intangible
What effect do we ignore when we use EBITDA margin to compare profitability among companies?
Capital Expenditures
What set of accounting rules do international companies follow?
International Financial Reporting Standards (IFRS)
Where would a company's investments into buying factories go on the income statement?
What are the most common approaches to recording depreciation in accounting?
Would it be better to use EBIT margin or EBITDA margin to compare companies in an industry where fixed assets are important?
EBIT Margin