Balance Sheets Flashcards

1
Q

What does a balance sheet report

A
  • The company’s assets
  • Liabilities
  • Shareholders equity

Snapshot of what a company owns and owes as well as the amount invested by shareholders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

How do you calculate the assets in a balance sheet

A

Assets = Liabilities + Shareholders’ equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What ratios can be calculated from a balance sheet

A
  • Debt to equity ratio

- Acid test ratio

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

How are assets set out in a balance sheet

A

Top to bottom in order of liquidity - the ease with which they can be converted into cash.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Generally what categories of assets are listed in what order on the balance sheet

A
  • Cash and cash equivalents
  • Marketable securities
  • Accounts receivable
  • Inventory
  • Prepaid expenses
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What are marketable securities

A

These are equity and debt securities for which there is a liquid market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What are accounts receivable

A

Refers to money that customers owe the company, perhaps including an allowance for doubtful accounts since a certain proportion of customers can be expected not to pay

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What are prepaid expenses

A

Represents the value of things that have already been paid for like insurance and advertising contracts and rent

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What are some long term assets that can’t be paid off easily

A
  • Long term investments
  • Fixed assets
  • Intangible assets
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What are examples of fixed assets

A
  • Land, machinery, equipment, buildings and other durable, generally capital intensive assets
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What are examples of intangible assets

A
  • Non physical assets like intellectual property and good will
  • usually only listed if acquired and not developed in house

Careful as then these can be wildly over or undervalued in a balance sheet

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What are liabilities

A

Money that the company owes to outside parties

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What are some examples of liabilities

A
  • Bills that the company has to pay suppliers
  • Interest on bonds it has issued to creditors
  • Rent
  • Utilities
  • Salary and a lot more
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What are current liabilities

A

Due within one year and these are listed in order of their due date

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

How are current liabilities listed in the balance sheet

A

Listed in the order of their due date.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What examples of current liabilities are there

A
  • Current portion of long term debt
  • Bank indebtness
  • Interest payable
  • Wages payable
  • Customers prepayments
  • Dividends payable and others
  • Earned and unearned premiums
  • Accounts payable
17
Q

What examples of long term liabilities are there

A
  • Long term debt
  • Pensoion fund liability
  • Deferred tax liability
18
Q

What is pension find liability

A

The money a company is required to pay into its employees retirement accounts

19
Q

What is shareholders’ equity also known as

A

Net assets

20
Q

What is shareholders equity

A

The money attributable to a business’ owners, meaning its shareholders

21
Q

What are retained earnings

A

The net earnings a company either reinvests in the business or uses to pay off debt; the rest is distributed to shareholders in the form of dividends

22
Q

What is the treasury stock of a company

A

This is the stock that a company has repurchased - it can be sold at a later date to raise cash or reserved to repel a hostile takeover.

23
Q

What is preferred stock

A

This is listed separate from common stock under shareholders equity Not quite sure what this really is

24
Q

What is additional paid-in capital or capital surplus

A

The amount that shareholders have invested in excess of the common and preferred stock accounts which are based on the par value rather than the market value.

25
Q

What is the difference between shareholders’ equity and market cap

A

Market cap based current price of the stock

Paid in capital is the sum of the equity that has been purchased at any price