Balance Sheet Flashcards

1
Q

Asset Turnover Ratio measures

A

Efficiency of a company’s assets to generate sales/revenue; 2.5 and higher is good

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2
Q

Return on Assets (ROA) =

A

Profit Margin * Asset Turnover

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3
Q

Financial Leverage

A

Company’s use of borrowing

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4
Q

Debt-to-Equity Ratio=

A

Total Liabilities / Owner’s Equity

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5
Q

Debt-to-Equity ratio measures

A

A company’s reliance on debt
How much of a company is owned by creditors compared to how much S/h equity is held by company
Good D-t-E ratio is 1.0-1.5 or less

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6
Q

Prepaid fees are what on the Balance Sheet?

A

Current Assets

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7
Q

Retained Earnings =

A

RE=RE_{0}-NI-D
RE = retained earnings
RE_{0} = beginning retained earnings
NI = net income profit or loss
D = dividend

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