Ch 5 Appendix + IFRS insights Flashcards Preview

Financial Acc Systems 1 > Ch 5 Appendix + IFRS insights > Flashcards

Flashcards in Ch 5 Appendix + IFRS insights Deck (13):
0

Ratio

Expresses mathematical relationship btw one quantity
And another

1

Ratio analysis

Expresses mathematical relationship among pieces of
Selected financial statement data, in a percentage, rate,
Or a simple proportion

2

4 major types of ratios

1 Liquidity ratios
2 activity ratios
3 profitability ratios
4 coverage ratios

3

Liquidity ratios

Measures of company's short term ability to pay
It's maturing obligations

4

Activity ratios

Measures how effectively the company uses its assets

5

Profitability ratios

Measures the degree of success or failure of a given
Company or division in a given period of time

6

Coverage ratios

Measures degree of protection for long-term creditors
And investors

7

3 major liquidity ratios?

1 current ratio
2 quick ratio
3 current cash debt coverage

8

3 major activity ratios?

1 accounts receivable turnover
2 inventory turnover
3 asset turnover

9

6 major profitability ratios?

1 profit margin on sales
2 return on assets
3 return on common stock equity
4 earnings per share
5 P/E ratio
6 payout ratio

10

5 major coverage ratios?

1 debt to assets
2 times interest earned
3 cash debt coverage
4 book value per share
5 free cash flow

11

4 IFRS and GAAP Similarities of balance sheet

1 Same title
2 require disclosures of changes in accounting policies,
Judgements and key assumptions that result in adjustments
Of assets and liabilities
3 provide comparative prior period information
prepared and presented annually

4 require presentation of non controlling interests
On equity section of balance sheet

12

4 Differences btw IFRS and GAAP for balance sheets

1 GAAP must follow SEC regulations that require specific
Lin items

2 IFRS current assets are listed in reverse order of liquidity

3 IFRS uses different terminology

4 Use of term "reserve" is discouraged in GAAP but not in
IFRS