Basic Terminology
____________ is the process of recording, summarizing, and reporting financial transactions.
What is Accounting?
What does the PV stand for in this formula?
FV = PV (1+ i) ^n
What is Present Value?
What is the formula for liquidity ratio?
Liquidity ratio = Total liquid assets / Total current debt
________________ is the the management of money and includes activities such as investing, borrowing, lending, budgeting, saving, and forecasting.
What is Finance?
What does the FV stands for in this formula?
FV = PV (1 + i) ^n
What is Future Value?
What is the formula for working capital?
Working capital = Current assets - Current liabilities
What are the four financial statements?
What is Balance Sheet, Income Statement, Cash Flow Statement, and Statement of Shareholders' Equity?
What does (i) stand for in this formula?
FV = PV (1 + i) ^n
What is Interest Rate? And it is expressed in decimals. For example, 6%, you will write it 0.06 in the equation.
What is the formula for Return on Assets (ROA)?
Return on assets = Net income / Total assets
What is the Accounting Equation?
Assets = Liabilities + Stockholder's Equity
What does (n) stand for in this formula?
FV = PV (1 + i) ^n
What is the total number of compounding periods?
How do you calculate debt to equity ratio?
DE = total liabilities/shareholders equity
An estimation of revenue and expenses is called ____ while _______ is a historical trend to predict future business results.
What is Budgeting and Forecasting?
What do (m) and (t) represent in this equation?
𝑃𝑉=𝐹𝑉/(1+𝑟/𝑚)𝑚t
m stands for the number of compounding and t stands for the number of years.
How do you calculate Net Income?