Chapter 18 Flashcards
(28 cards)
a measure of how efficiently a company uses its assets to generate sales; computed by dividing net sales by average assets
asset turnover
a measure of a company’s immediate short-term liquidity; computed by dividing the sum of cash, short-term investmetns, and net receivables by current liabilites
acid-test (quick) ratio
the use of a principle in the current year that is different from the one used in the preceding year
change in accounting principle
includes all changes in stockholders’ equity during a period except those resulting from investments by stockholders and distributions to stockholders
comprehensive income
a measure used to evaluate a company’s liquidity and short-term debt-paying ability; computed by dividing current assets by current liabilities
current ratio
measures the percentage of total assets provided by creditors; computed by dividing total debt by total assets
debt to total assets ratio
the disposal of a significant segment of a business
discontinued operations
disposal of a significant segment of a business
discontinued operations
the net income earned on each share of common stock; computed by dividing net income minus preferred dividends (if any) by the number of weighted-average common shares outstanding
earnings per share
events and transactions that are unusual in nature and infrequent in occurrence
extraordinary item
a technique for evaluating a series of financial statement data over a period of time, to determine the increase (decrease) that has taken place, expressed as either an amount or a percentage
horizontal analysis
a measure of the liquidity of inventory; computed by dividing cost of goods sold by average inventory
inventory turnoverr
measures of the short- term ability of the company to pay its maturing obligations and to meet unexpected needs for cash
liquidity ratios
measures the percentage of earnings distributed in the form of cash dividends; computed by dividing cash dividends by net income
payout ratio
measures the ratio of the market price of each share of common stock to the earning per share; computed by dividing the market price of the stock by earnings per share
price earnings ratio
measures the percentage of each dollar of sales that results in net income; computed by dividing net income by net sales
profit margin
measures of the income or operating success of a company for a given period of time
profitability ratios
a measure of income that usually excludes items that a company thins are unusual or nonrecurring
pro forma income
indicates the level of full and transparent info provided to users of the financial statements
quality of earnings
an expression of the mathematical relationship between one quantity and another. The relationship may be expressed either as a percentage, a rate, or a simple proportion
ratio
a technique for evaluating financial statements that expresses the relationship between selected financial statement data
ratio analysis
a measure of the liquidity of receivables; computed by dividing net credit sales by average net receivables
receivable turnover
an overall measure of profitability; computed by dividing net income by average assets
return on assets
measures the dollars of net income earned for each dollar invested by the owners; computed by dividing net income minus preferred dividends (if any) by average common stockholders’ equity
return on common stockholderrs’ equity
