Chapter 3 Flashcards
uses of cash
A firm’s activities in which cash is spent. Also called applications of cash.
all debts of all maturities to all creditors
total debt ratio
The average period in which a company collects on its credit sales
average collection period (ACP
Relationships determined from a firm’s financial information and used for comparison purposes.
financial ratios
Long-term solvency ratios are intended to address the firm’s long-term ability to meet its obligations, or, more generally, its financial leverage. These are sometimes called ____
financial leverage ratios/leverage ratios
common-size statement
A standardized financial statement presenting all items in percentage terms. Balance sheet items are shown as a percentage of assets and income statement items as a percentage of sales.
A U.S. government code used to classify a firm by its type of business operations.
Standard Industrial Classification (SIC) code
liquidity measures
short-term solvency ratios as a group are intended to provide information about a firm’s liquidity, and these ratios are sometimes called____
interest coverage ratio
The ratio that measures how well a company has its interest obligations covered
burn rate
The average daily operating cost for start-up companies. AKA the rate at which cash is burned in the race to become profitable
DuPont identity
Popular expression breaking ROE into three parts: operating efficiency, asset use efficiency, and financial leverage.
total capitalization
total long-term debt and equity is sometimes called ____
A firm’s activities in which cash is spent. Also called applications of cash.
uses of cash
financial leverage ratios/leverage ratios
Long-term solvency ratios are intended to address the firm’s long-term ability to meet its obligations, or, more generally, its financial leverage. These are sometimes called ____
financial ratios
Relationships determined from a firm’s financial information and used for comparison purposes.
Tobin’s Q ratio
the market value of the firm’s assets divided by their replacement cost
statement of cash flows
A firm’s financial statement that summarizes its sources and uses of cash over a specified period.
a measure of how the stockholders fared during the year
Return on equity (ROE)/return on book equity/return on net worth
a measure of profit per dollar of assets
Return on assets (ROA)/return on book assets
A standardized financial statement presenting all items in percentage terms. Balance sheet items are shown as a percentage of assets and income statement items as a percentage of sales.
common-size statement
total debt ratio
all debts of all maturities to all creditors
a group of the top firms in an industry
aspirant group
amortization
a noncash deduction similar conceptually to depreciation, except it applies to an intangible asset (such as a patent) rather than a tangible asset (such as a machine
firms similar in the sense that they compete in the same markets, have similar assets, and operate in similar ways
peer group
Standard Industrial Classification (SIC) code
A U.S. government code used to classify a firm by its type of business operations.
The ratio that measures how well a company has its interest obligations covered
interest coverage ratio
total long-term debt and equity is sometimes called ____
total capitalization
A firm’s activities that generate cash.
sources of cash
A firm’s financial statement that summarizes its sources and uses of cash over a specified period.
statement of cash flows
Return on equity (ROE)/return on book equity/return on net worth
a measure of how the stockholders fared during the year
average collection period (ACP
The average period in which a company collects on its credit sales
