12.4 financial decision making Flashcards Preview

Intro to Business > 12.4 financial decision making > Flashcards

Flashcards in 12.4 financial decision making Deck (31):
1

assets, liabilites and owner's equity are reported on _____

the balance sheet

2

the _____ ratio is the company's liabilities divided by the owner's equity

debt to equity ratio

3

differences between actual and budgeted performance

discrepancies

4

financial performance ratios

comparisons of a company's financial elements that indicate how well the business is performing

5

true or false

 

sales and profits for a specific period are reported in a company's income statement

false

sales, expenses and profits are in income statement

6

if income and expenses are similar to the budget, the manager will not need to take action.  if there are financial _____, managers will take corrective action to try to bring performance back in line with the budget.

if income and expenses are similar to the budget, the manager will not need to take action.  if there are financial problems, managers will take corrective action to try to bring performance back in line with the budget.

7

sales, expense and profits for a specific period are reprorted on _____

income statement

8

the ____ ratio tells yo if the business can pay its debts as they become due

current ratio

9

____ are responsible for the financial health of their company and for the specific areas of the company under their control

managers

10

the return on equity ratio shows the rate of return the ____ are getting on the money they invested in the company

owners

11

the debt to equity ratio tells you how much the business is relying on money _____ from others that will have to be paid back rather than money provided by the owners

borrowed

12

what does a current ratio of 1:1 mean?

means that there are at least as many current assets as current liabilities

13

current assets compared to the current liabilities

current ratio

14

the _____ ratio is the net profit of the business compared to the amount of owner's equity

return on equity ratio

15

if more money than is needed is used for certain operations, there may not be ____ for other parts of the company

if more money than is needed is used for certain operations, there may not be enough for other parts of the company

16

true or false

 

employees rather than managers are responsible for the financial health of a company

false

managers are responsible for the financial health

17

in adequate (enough) finances are not available, the _____ that is required will not be done as well or as quickly as needed

in adequate (enough) finances are not available, the work that is required will not be done as well or as quickly as needed

18

managers use ____ as a guide to operate the business

budgets

19

at the end of the period covered by the budget, the business will prepare new financial _____

statements

20

The 3 most important elements of a company's financial strength are its assets, liabilities and owner's equity.  3 other key financial elements for a business are the amount of ____, _____ & _____

sales, expenses and profits

21

the _____ ratio is the total sales compared to the net income for a period such as six months or a year

net income ratio

22

____ let managers identify problems before they become serious enough to harm the business

discrepancies

23

the net income ratio shows how much profit is being made by each dollar of ____ for the period being analyzed

sales

24

comparisons of a company's financial elements that indicate how well the business is performing

financial performance ratios

25

a ____ identifies the amount of money needed for all parts of the business to complete planned activities.  it also projects what types and amounts of income will be earned from the sale of the company's products, services and other investments

budget

26

differences between actual and expected performance are

  • ratios
  • budgets
  • profit or loss
  • discrepancies

budgets

27

the first step in financial decision making is preparing a ____

budget

28

what are some important financial performance ratios used by businesses?

  1. current ratio
  2. debt to equity ratio
  3. return on equity ratio
  4. net income ratio

29

which of the following is not one of the three most important elements of a company's financial strength?

  • assets
  • owner's equity
  • payroll
  • liabilities

payroll

30

expenses should ____ exceed the budgeted amount

expenses should NOT exceed the budgeted amount

31

financial statements are important management ____ owners and managers

business