Accounting Ratios Midterm (other stuff too) Flashcards
Average Age Percentage
(Total Accum. Dep / Total PPE - Land) 100
To what extent the PPE has been depreciated
Average Age
Total Accum. Dep / Dep Exp
How long a company has been using its PPE (how old it is)
Fixed Asset Turnover
Rev / Average Net PPE
How much $ the company has been generating sales relative to its investments in PPE
A/P Turnover
(COGS - Begin. Inv + EI) / Average A/P
How long it takes a company to pay suppliers
High # : paying back fast
Low # : paying back slowly
Average Payment Period
365 / A/P Turnover Ratio
How many days it takes a company to pay back credits
Leverage
Ac ompanys use of debt to generate returns for shareholders
Leverage ratios
To assess a company’s capital structure and the risk associated with the use of debt
Debt to Equity
Total Liabilities - Cash / SE
Measures the % of debt relative to each dollar is equity
(how much debt are you relying on compared to equity)
Net Debt as a % of Total Capitalization
(Total Liabilities - Cash) / (Total Liabilities - Cash) + SE
Measures what % of debt represents the company’s total financing
Interest Coverage
EBITDA / Int Exp
Measures company’s ability to meet its Interest obligation through its earning
(# of times EBITDA can cover its Interest Exp in a year)
Loyalty Provision
How much was actually redeemed
(# of points OVER every $ spent) x revenue generated x estimate of points redeemed
Gift Card Breakage
Split by % redeemed and % not redeemed
Journalize Breakage once a month
Gift Card Liability
Revenue
SL
cost - residual / useful life
Units of Production
cost - residual / useful units (sum of all units) = dep/unit x # units used in year
DDB
((1/useful life) x2) x Carrying amount
Initial sale of Gift Card
Cash
Gift Card Liability
When Gift Card is redeemed
Gift Card Liability
Revenue
COGS
Inv
Provision
estimated liability that a company recognizes in its financial statements before the exact amount is known
So Adjust..
How much estimated - How much in reality
Assurance Type Warranty
Basic warranty comes with the purchase price
At POS of a Assurance Warranty
Warranty Expense
Warranty Provision
Service Type Warranty
Optional cost, Second performance obligation
At POS of a Service Warranty
Cash (of product and warranty)
Revenue (of product)
Unearned Warranty Revenue (of warranty)
Cash Payment of a Bond
Face Value x Contract rate
payment will # will be the same throughout the term of the bond
Interest Expense of a Bond
Carrying Value x Yield
Lease at POS
Right of Use Asset
Lease Liability
Depreciating Lease
Dep Exp ROU asset
Accum. Dep Exp
When Lease Payments Are Made
Int Exp
Lease Liability
Cash
Defined Contribution PP
a PP that specifies the amount a company has to contribute into its employee’s pension fund
Company only funds its defined amount
Deine Benefit Plan
A PP that specifies the benefits that employees will receive in their retirement
usually determined by amount of year worked and their highest salary
Steps of a Case
To From Re
Overview
Users and Objectives
Constraints (IFRS)
Conflicts
Primary Users and Objectives
Analysis (use case ex copy paste)
Issue
Analysis
Recommendation
Conclusion
