Chapter 4 Flashcards
(28 cards)
Gains or Losses
Increase or decrease equity
Earnings Quality
The ability of current reported earnings to predict future earnings
Permanent earnings
Routines (continuing and operating sections of the income statement)
Temporary
Unlikely to happen again ( Discontinued and other income of the income statement.
Permanent item in other income
interest
Discontinued Operations
Major shift away from a component of the business
Basic EPS
(Net income - Preferred stock dividend)/(weighted-average #of common shares outstanding)
comprehensive income
Net income + Other comprehensive income
Accumulated Other comprehensive income
reported in BS as a part of shareholders equity
Exampled of OCI
Gains/loses
Deferred gains
Foreign currency
Net unrealized holdings
Asset Turnover Ratio
Net sales/ Avg Total Assets Want higher
Receivables turnover ratio
Net sales/ Average AR(Net) Want higher
Average Collection Period
365/ Receivables turnover ratio Want lower
Inventory turnover ratio
C.O.G.S./ Avg inventory Want higher
Average days in inventory
365/ Inventory turnover ratio
Profit Margin on sales
Net Income/ Net sales Want higher
Return on assets
Net income/ Average total assets Want higher
Return on shareholder’s equity
Net income/ Avg shareholders’ equity Want higher
Statement of Cash flows
Provides information about the cash receipts and cash disbursements. Helpful for future profitability. liquidity, and long term solvency
Operating Activities
If it affects income statement it is operating
Investing Activities
Related to acquisition and disposition of long-lived assets used for investments
Financing activities
related to external financing of the company with the owners and creditors
IFRS V GAAP
Gaap- Op= dividends received interest received, and interest paid
IFRS- Inv= dividends and interest received
Fin= interest paid
Retospective
Restate all prior periods
