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Elec 2 - MAS > Prelim Exam > Flashcards

Prelim Exam Flashcards

(74 cards)

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1
Q

are created with the use of numerical values taken from financial statements to gain meaningful information about a company.

A

Financial ratios

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2
Q

are financial ratios that measure a company’s ability to repay both short- and long-term obligations.

A

Liquidity ratios

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3
Q

measures a company’s ability to pay off short-term liabilities with current assets

A

Current ratio

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4
Q

5 financial ratios

A

Liquidity ratios
Leverage ratios
Efficient ratios
Profitability ratios
Market value ratios

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5
Q

measures a company’s ability to pay off short-term liabilities with quick assets

A

Acid-test ratio

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6
Q

measures a company’s ability to pay off short-term liabilities with cash and cash equivalents

A

Cash ratio

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7
Q

is a measure of the number of times a company can pay off current liabilities with the cash generated in a given period

A

Operating cash flow ratio

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8
Q

Current ratio f

A

Current ratio = Current assets / Current liabilities

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9
Q

Acid-test ratio f

A

Acid-test ratio = Current assets – Inventories / Current liabilities

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10
Q

Cash ratio f

A

Cash ratio = Cash and Cash equivalents / Current Liabilities

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11
Q

Operating cash flow ratio f

A

Operating cash flow ratio = Operating cash flow / Current liabilities

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12
Q

measure the amount of capital that comes from debt. They are used to evaluate a company’s debt levels.

A

Leverage ratios

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13
Q

measures the relative amount of a company’s assets that are provided from debt

A

Debt ratio

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14
Q

Debt ratio f

A

Debt ratio = Total liabilities / Total assets

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15
Q

calculates the weight of total debt and financial liabilities against shareholders’ equity

A

Debt to equity ratio

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16
Q

Debt to equity ratio f

A

Debt to equity ratio = Total liabilities / Shareholder’s equity

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17
Q

shows how easily a company can pay its interest expenses

A

Interest coverage ratio

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18
Q

Interest coverage ratio f

A

Interest coverage ratio = Operating income / Interest expenses

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19
Q

reveals how easily a company can pay its debt obligations

A

Debt service coverage ratio

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20
Q

Debt service coverage ratio f

A

Debt service coverage ratio = Operating income / Total debt service

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21
Q

also known as activity financial ratios, are used to measure how well a company is utilizing its assets and resources

A

Efficiency ratios

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22
Q

measures a company’s ability to generate sales from assets

A

Asset turnover ratio

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23
Q

Asset turnover ratio f

A

Asset turnover ratio = Net sales / Average total assets

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24
Q

measures how many times a company’s inventory is sold and replaced over a given period

A

Inventory turnover ratio

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25
Inventory turnover ratio f
Inventory turnover ratio = Cost of goods sold / Average inventory
26
COGS
Net sales Less: cost of sales = gross profit Less: operating expenses = net profit/loss or net income
27
measures how many times a company can turn receivables into cash over a given period
Accounts receivable turnover ratio
28
Receivables turnover ratio f
Receivables turnover ratio = Net credit sales / Average accounts receivable
29
measures the average number of days that a company holds on to inventory before selling it to customers
Days sales in inventory ratio
30
Days sales in inventory ratio f
Days sales in inventory ratio = 360 / Inventory turnover ratio
31
measure a company’s ability to generate income relative to revenue, balance sheet assets, operating costs, and equity
Profitability ratios
32
compares the gross profit of a company to its net sales to show how much profit a company makes after paying its cost of goods sold
Gross margin ratio
33
Gross margin ratio f
Gross margin ratio = Gross profit / Net sales
34
sometimes known as the return on sales ratio, compares the operating income of a company to its net sales to determine operating efficiency
Operating margin ratio
35
Operating margin ratio f
Operating margin ratio = Operating income / Net sales
36
measures how efficiently a company is using its assets to generate profit
Return on assets ratio
37
Return on assets ratio f
Return on assets ratio = Net income / Total assets
38
measures how efficiently a company is using its equity to generate profit
Return on equity ratio
39
Return on equity ratio f
Return on equity ratio = Net income / Shareholder’s equity
40
are used to evaluate the share price of a company’s stock
Market value ratios
41
calculates the per-share value of a company based on the equity available to shareholders
book value per share ratio
42
book value per share ratio f
Book value per share ratio = (Shareholder’s equity – Preferred equity) / Total common shares outstanding
43
measures the amount of dividends attributed to shareholders relative to the market value per share
Dividend yield ratio
44
Dividend yield ratio f
Dividend yield ratio = Dividend per share / Share price
45
measures the amount of net income earned for each share outstanding
Earnings per share ratio
46
Earnings per share ratio f
Earnings per share ratio = Net earnings / Total shares outstanding
47
compares a company’s share price to its earnings per share
Price-earnings ratio
48
Price-earnings ratio f
Price-earnings ratio = Share price / Earnings per share
49
Refers to the function of providing professional advisory (consulting) services, the primary purpose of which is to improve the clients use of its capabilities and resources to achieve the objectives of the organization
Management advisory services
50
Defines the companies business, its objectives, and its approach to reach those objectives
Mission
51
It describes the desired future position of the company
Vision
52
Role of management accountant
Provide managers information in helping formulate strategy
53
Matching knowledge of marketplace, opportunities, and threats with company’s resources and capabilities
Strategic analysis
54
Managers taking action by using planning and control systems to help the collective decisions of an organization
Implementing strategy
55
Three roles of management accountants for success
problem-solving scorekeeping attention directing
56
Comparative analysis for decision making
Problem-solving
57
Accumulating data and reporting reliable results
Scorekeeping
58
Helping directors properly focus their attention
Attention directing
59
Managerial accounting
Reports are for internal users Has a strong emphasis on the future Data should be relevant Focuses on timeliness of information Focuses on segments of a company Not bound by GAAP Not mandatory
60
Financial accounting
Reports are for external users Summarizes, past transactions Data should be objective and verifiable Focuses on precision Concerned with reporting for a company as a whole Must conform with GAAP Mandatory
61
Covers all managerial accountants in the Philippines
Cord of ethics in effect in the Philippines
62
Three basic tools in a financial statement analysis
Horizontal analysis or trend analysis Vertical analysis or common size analysis Racial analysis
63
A technique for evaluating a series of financial statement data over a period of time
Horizontal analysis
64
Its purpose is to determine the increase and decrease the test. They can please express either an amount or a percentage.
Horizontal analysis
65
Involves comparison of amount shown in the FS of two or more consecutive periods. The difference and percentage change of the amounts are calculated using the earlier period as the base period
Horizontal analysis
66
Horizontal analysis f
Percentage of change = (current year value - base year value) / base year value
67
The process of comparing figures in the FS of a single period. It involves conversion of amounts in the FS to a common base.
Vertical analysis
68
This is accomplished by expressing all figures in the FS percentages of an important items, such as total assets or net sales
Vertical analysis
69
Base for balance sheet; income statement
Total assets; net sales
70
This technique, establishing relationship among financial statement accounts at given date or period of time. These ratios analyze the firm’s liquidity, the use of leverage, asset management, cost control, profitability growth, and valuation.
Ratio analysis
71
Provides information about the firm’s ability to pay its current obligations and continue operations
Liquidity ratio
72
To evaluate companies liquidity and ability to pay current obligations
Current ratio
73
Cash, short term investments, and accounts receivable
Quick assets
74
This ratio is a much more stringent test of short term liquidity. It measures the number of times that the current liabilities could be paid with available cash and near cash assets.
Acid test ratio or quick ratio

Elec 2 - MAS (3 decks)

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