Financial Statements

Question 0

Liquidity

Answer 0

Ease of conversion of an asset into cash

Question 1

Balance sheet

Answer 1

Reports assets, liabilities and equity at a specific point in time

Question 2

Fixed assets

Answer 2

Useful life exceeding 1 year

Question 3

Liabilities

Answer 3

Funds provided by lenders

Question 4

Long term debt (LTD)

Answer 4

Obligations that are due after one year

Question 5

Stockholders equity

Answer 5

Funds provided by the firms stock owners

Question 6

Common stock/paid-in surplus

Answer 6

Cash that stockholders paid when it originally issued stock

Question 7

Net working capital

Answer 7

Current assets - current liabilities

Question 8

Financial leverage

Answer 8

Extent to which debt securities are used

Question 9

Capital structure

Answer 9

Amount of debt v equity to maintain on the balance sheet

Question 10

Book value (historical cost)

Answer 10

Amount paid for assets when purchased

Question 11

Market value

Answer 11

What an asset would sell for if it sold today

Question 12

Income statement

Answer 12

Reports total revenues and expenses over a period of time

Question 13

Gross profit

Answer 13

Net sales -COGS

Question 14

EBIT

Answer 14

Earnings before interest and taxes

Question 15

EBT

Answer 15

Earnings before taxes

Question 16

Average tax rate

Answer 16

Percentage of each dollar of taxable income that is paid in taxes

Question 17

Marginal tax rate

Answer 17

Amount of additional taxes paid for an additional dollar of taxable income earned

Question 18

Statement of cash flows

Answer 18

Shows cash flows over time

Question 19

Free cash flows

Answer 19

Available for payments to stockholders and debt holders after investments to keep the firm going are made

Question 20

Statement of Retained Earnings

Answer 20

Reconciles net income over a period and any cash dividends paid

Question 21

SOX

Answer 21

2002 regulatory - requires that any firms senior management must sign off on financial statements