week 10 Flashcards
(24 cards)
how is the debt to equity ratio used
it discribes the extent that a firm is finaced through borrowed money
how to calculate the current ratio
current assets` divided by current liabilities
what is the accounting equation
assests = liabillites + owners equity
what feild of accounting is concered with the external users of a companies financial information
finacial accounting
what is the purpose of calculating profitability ratio
its so potential investors know the potnetial returns that they can expect
what is liquidity
it discribes the ease and speed that a asset can be converted to cash
what is the point of the balance sheet
it highlights the firms finacial condition in terms of there assets, liabilites and owners equity
who is the budget primarily for
its mostly for internal users like the companies managers
how to calculate the debt to owners equity ratio
dividing total liabilites / shareholder equity (or owners in this case)
what is included on the balance sheet
firm’s assets, liabilities, and owners’ equity
what is included on the balance sheet
firm’s assets, liabilities, and owners’ equity
what is the difference from profit and cash flow
profit is the remained of revenue after expenses are subtracted while cashflow is the money going in and out of the business
what type of asset are things like patents, trademarks etc
intangible assets
when would the owners equity be positive
when the assets are greater then the liabilities
who are the 5 users of accounting information
managers, investors, government, employees, tax authorities
who are internal accounting users
managers and employees
who are the external users
government, investors, tax authorities
what is profitablity ratio
its the companies ability to generate and earn profits
what is activity ratio
indicates how effective the company is leveraging the assets on its balance sheet to generate revenues and cash
what are some examples of assets
Cash, accounts receivable, inventory, equipment
what are some examples of liabilities
accounts payable, debts
what was the HBR for this week
… tread lightly
what was the HBR about
they talked about the risks and consequences with accounting and how some companies manipulate things
what are the minefields(2) that were talked about in the HBR
revenue measurment and recognition
