19.4: Shareholders’ Equity and Ratios Flashcards
Components of Equity:
- Capital contributed by owners (or common stock, or issued capital).
- Preferred shares.
- Treasury shares (or treasury stock or own shares repurchased).
- Retained earnings.
- Accumulated other comprehensive income (or other reserves).
6.Non controlling interest (or minority interest).
Statement of changes in equity - (statement of owners’ equity) …
A financial statement that reconciles the beginning-of-period and end-of-period balance sheet values of shareholders’ equity.
Techniques of Common size Analysis of the Balance Sheet:
1.Vertical common-size analysis, involves stating each balance sheet item as a percentage of total assets.
2.Ratios that facilitate time-series and cross-sectional analysis of a company’s financial position. Balance sheet ratios are those involving balance sheet items only.
Capital structure - the mix of …
Debt and equity that a company uses to finance its business; a company’s specific mix of long-term financing.
3 Liquidity ratios:
Current Ratio
Quick Ratio
Cash Ratio
Current ratio formula:
Current assets / current liabilities
Quick ratio formula:
(Cash + Marketable securities + Receivables) / Current Liabilities
Cash ratio formula:
(Cash + Marketable securities) / Current Liabilities
4 Solvency ratios:
Long-term debt-to-equity ratio
Debt-to-equity ratio
Total debt
Financial leverage
Long-term debt-to-equity ratio formula:
Total long-term debt / total equity
Debt-to-equity ratio formula:
Total debt / total equity
Total debt ratio formula:
Total debt / total assets
Financial leverage ratio formula:
Total assets / total equity
