Analyzing Balance Sheets Flashcards
What are intangible assets?
Assets without a physical form, such as patents or trademarks.
What is “Goodwill”?
An intangible asset that represents the excess of the purchase price of an acquired company over the value of the net identifiable assets acquired.
What are “Derivatives”?
A financial instrument whose value depends on the value of some underlying asset or factor (e.g., a stock price, interest rate, exchange rate).
What is “Held-to-Maturity”?
Debt (fixed-income) securities that a company intends to hold to maturity; these are presented at their original cost, updated for any amortization of discounts or premiums.
What is “Available for Sale”?
- Under U.S. GAAP, debt securities that are not classified as either held-to-maturity or held-for-trading securities.
- The investor is willing to sell but not actively planning to sell.
How are “Held for Sale” debt securities reported?
At fair value, with unrealized gains included as a component of other comprehensive income.
What are deferred tax liabilities?
A balance sheet liability that arises when a deficit amount is paid for income taxes relative to accounting profit.
What is “solvency”?
refers to the condition in which firm value exceeds the face value of debt used to finance the firms assets.
What is a company’s “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.
What are “Balance Sheet Ratios” ?
Financial ratios involving balance sheet items only.
What are liquidity ratios?
Financial ratios measuring the company’s ability to meet its short-term obligations to creditors as they come due.
What are “solvency ratios”?
Ratios that measure a company’s ability to meet its long-term obligations.
