App Study guide flash cards
In order of things I need to study
Accounts receivable
Amount due by customers for goods and services already delivered
Accumulative depreciation
As buildings and equipment age they begin to lose value. The loss of value with each year is captured in accumulative depreciation to more accurately reflect the book value of an asset.
prepaid amounts
Accounts as assets because they were paid before they were actually due.
Accounts payable
Accounts in which an organization owes money, can include utilities or services acquired under informal agreements.
Current long term debt
Amount of principal that was paid before the reporting period
Interest payable
Interest payments on loan extended to an organization
Profitability Ratios
Help to quantify and organizations ability to generate income beyond covering expenses. Provide a view of how well a company makes money
Gross profit Margin
Provides insight into the efficiency of manufacturing a product. Revenue should cover the cost of a project.
Gross profit margin =
revenue-costs of goods sold-general and administrative costs
Operating Margin=
(EBITA)/REVENUE
Net Profit Margin=
Net Income/revenue
Return on Assets=
Net income/Total Assets
Return on Equity=
Net income/Shareholder equity
Current Ratio=
Current Assets/Current liability
Establishes the company’s ability to cover short term obligation.
Quick Ratio=
Cash+Securities+Accounts receivable/current liabilities
Provides accurate picture of ability to cover bills of the current reporting period
Debt to equity ratio=
Total liabilities/Shareholder Equity
ROI=
investment value at end of period/investment value beginning of period (-1)
Initial investment + interest earned/ initial investment (-1)
Calculating the return on an investment of a security program=
avoid loss + recoveries made/cost of security program
Assets=
liabilities + Shareholder equity
Liabilities can and most likely will be a negative
What item lines are listed on a balance sheet
Assets
liabilities
shareholder equity
What does an income statement provide?
A quantified view of an organizations revenue, expenses and the net income of the operations over a defined period of time.
Cash flow statement=
Documents if an organization is generating enough cash to cover operations. Does it need to acquire additional assets.
Illustrates the Net operating, Investing and financing cash flow to identify where cash is being generated to cover business operations
