Chapter 13 Accounting Flashcards
(14 cards)
In horizontal analysis what does the percent represent?
Percent in change from year to year.
In vertical analysis what does the percent represent?
Reports each item as a percent of the sales revenue. Helps more clearly see what specific things changed.
Current ratio =
current assets/current liabilities
Debit to asset =
total liabilities/ total assets
Net profit margin =
net income / sales revenue
Gross profit =
gross profit / sales revenue
Return on assets =
net income / average assets
Return on equity =
net income/ average
Earnings per share =
Net income / outstanding
Working capital =
Current assets - current liabilities. the higher the better
Profitability ratio refers to what?
The companies ability to generate income in the current period
Liquidity ratio refers to what?
the companies short term survival. Ability to pay off current debt
Solvency ratio refers to what?
The companies long term survival
