Financial Ratios/Calculations
Current assets divided by current liabilities.
What is the current ratio?
Gross profit divided into revenue, or sales.
What is the gross profit margin?
A plan for spending and earning money.
What is a budget?
A legally binding agreement signed by the partners of that business.
What is a partnership agreement?
A business that funds itself through personal funds (savings, credit, retirement funds etc.) and revenue from the business.
What is bootstrapping?
EBIT
What is earnings before interest and taxes?
Gross revenue minus all expenses.
What is net income?
ROI stands for?
What is return on investment?
A _____ partner is a participant in a partnership who has unlimited personal liability.
What is a general partner?
A business expense that may be different each period
What is a variable expense?
Liabilities = Assets + Owners Equity
What is the balance sheet equation or basic accounting equation?
A financial statement of what a business owns and owes.
What is a balance sheet?
The accounting term for a customer who owes money to a business.
What is an accounts receivable?
A legal agreement between two parties that forbids one party from disclosing shared information.
What is a non-disclosure agreement (NDA)?
A financial statement that is a projection/prediction of revenue, expenses, and profits.
What is a Pro Forma profit and loss or income statement?
The basic working capital calculation.
What is current assets minus current liabilities?
This financial statement contains the following sections: operating activities, investing activities, and financing activities.
What is a cash flow statement?
The department at a business that a vendor would call to inquire about money that is owed to that vendor by that company.
What is the accounts payable department?
A legal business entity in which the owners are referred to as members.
What is a limited liability company?
An owner promise to personally repay a debt if the business does not pay that debt.
What is a personal guarantee?
Operating income as a percentage of net sales or revenue.
What is the operating profit margin
On January 1 a company borrowed $100,000 at 12% per year. The interest will be paid quarterly, with the first payment due on April 1. What should the company report on its income statement for January?
What is an interest expense of $1,000.
When a business does not have enough cash to be able to pay its liabilities.
What is a cash flow problem?
A legal business entity where the owners are not liable for the business debts (unless a personal guarantee has been signed) and the entity is limited to 100 shareholders or fewer.
What is a S-Corp?
A non-physical asset with no fixed value, such as intellectual property.
What is an intangible asset?