Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

MOS 2310: Finance > Ch 2 - Intro to Financial Statement Analysis > Flashcards

Ch 2 - Intro to Financial Statement Analysis Flashcards

You may prefer our related Brainscape-certified flashcards:
Series 65 flashcards Series 63 flashcards Series 66 flashcards Series 7 Top-off Exam flashcards SIE Exam flashcards CFA flashcards Series 79 Top-Off Exam flashcards
1
Q

financial statements

A

Accounting reports issued by a firm quarterly and/or annually that present past performance information and a snapshot of the firm’s assets and the financing of those assets

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

annual reports

A

The yearly summary of business, accompanying or including financial statements,sent by U.S.public companies to their stockholders.

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

Generally Accepted Accounting Principles (GAAP)

A

A common set of rules and a standard for- mat for public companies to use when they prepare their financial reports

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

auditor

A

A neutral third party,which corporations are required to hire,that checks a firm’s annual financial statements to ensure they are prepared according to GAAP,and provides evidence to sup- port the reliability of the information

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

balance sheet

A

A list of a firm’s assets and liabilities that provides a snapshot of the firm’s financial position at a given point in time.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

assets

A

The cash,inventory,property,plant and equipment,and other investments a company has made

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

liabilities

A

firm’s obligations to its creditors

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

shareholders’ equity, stockholders’ equity

A

An accounting measure of a firm’s net worth that rep- resents the difference between the firm’s assets and its liabilities

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

common stock and paid- in surplus

A

The amount that stockholders have directly invested in the firm through purchasing stock from the company

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

retained earnings

A

Profits made by the firm,but retained within the firm and reinvested in assets or held as cash.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

current asset

A

Cash or assets that could be converted into cash within one year

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

marketable securities

A

Short-term, low-risk investments that can be easily sold and converted to cash

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

accounts receivable

A

Amounts owed to a firm by customers who have purchased goods or services on credit.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

inventories

A

A firm’s raw materials as well as its work-in-progress and finished goods.

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

long-term assets

A

Assets that produce tangible benefits for more than one year

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

depreciation

A

A yearly deduction a firm makes from the value of its fixed assets (other than land) over time,according to a depreciation schedule that depends on an asset’s life span.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

book value

A

The acquisition cost of an asset less its accumulated depreciation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

current liabilities

A

Liabilities that will be satisfied within one year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

accounts payable

A

The amounts owed to creditors for products or services purchased with credit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

notes payable,short- term debt

A

Loans that must be repaid in the next year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

net working capital

A

The difference between a firm’s current assets and current liabilities that rep- resents the capital avail- able in the short term to run the business.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

long-term debt

A

Any loan or debt obligation with a maturity of more than a year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

book value of equity

A

The difference between the book value of a firm’s assets and its liabilities; also called shareholders’ equity and stockholders’ equity ,it represents the net worth of a firm from an accounting perspective.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

market capitalization

A

The total market value of equity; equals the market price per share times the number of shares

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

liquidation value

A

The value of a firm after its assets are sold and liabilities paid.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

market-to-book ratio (price-to-book [P/B] ratio

A

The ratio of a firm’s market (equity) capitalization to the book value of its stockholders’ equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

value stocks

A

Firms with low market-to-book ratios

28
Q

growth stocks

A

Firms with high market-to-book ratios

29
Q

leverage

A

A measure of the extent to which a firm relies on debt as a source of financing

30
Q

debt-equity ratio

A

The ratio of a firm’s total amount of short-and long-term debt (including current maturities) to the value of its equity,which may be calculated based on market or book values

31
Q

enterprise value

A

The total market value of a firm’s equity and debt, less the value of its cash and marketable securities. It measures the value of the firm’s underlying business.

32
Q

current ratio

A

ratio of current assets to current liabilities

33
Q

quick ratio

A

The ratio of current assets other than inventory to current liabilities

34
Q

income statements

A

A list of a firm’s revenues and expenses over a period of time.

35
Q

net income or earnings

A

The last or “bottom”line of a firm’s income statement that is a measure of the firm’s income over a given period of time.

36
Q

gross profit

A

The third line of an income statement that represents the difference between a firm’s sales revenues and its costs.

37
Q

operating income

A

firm’s gross profit less its operating expenses

38
Q

EBIT

A

firm’s earnings before interest and taxes are deducted

39
Q

earnings per share (EPS)

A

firm’s net income divided by the total number of shares outstanding

40
Q

stock options

A

The right to buy a certain number of shares of stock by a spe- cific date at a specific price.

41
Q

convertible bonds

A

Corporate bonds with a provision that gives the bondholder an option to convert each bond owned into a fixed number of shares of common stock

42
Q

dilution

A

An increase in the total number of shares that will divide a fixed amount of earnings

43
Q

diluted EPS

A

The earnings per share a company would have based on the total number of shares including the effects of all stock options and convert- ible bonds.

44
Q

gross margin

A

The ratio of gross profit to revenues (sales),it reflects the ability of the company to sell a product for more than the sum of the direct costs of making it.

45
Q

operating margin

A

The ratio of operating income to revenues,it reveals how much a company has earned from each dollar of sales before deducting interest and taxes.

46
Q

net profit margin

A

The ratio of net income to revenues,it shows the frac- tion of each dollar in revenues that is available to equity holders after the firm pays its expenses, plus interest and taxes.

47
Q

accounts receivable days (average collection period or days sales out- standing)

A

An expression of a firm’s accounts receivable in terms of the number of days’ worth of sales that the accounts receivable represents.

48
Q

accounts payable days

A

An expression of a firm’s accounts payable in terms of the number of days’ worth of cost of goods sold that the accounts payable represents

49
Q

inventory days

A

An expression of a firm’s inventory in terms of the number of days’ worth or cost of goods sold that the inventory represents

50
Q

inventory turnover ratio

A

The cost of goods sold divided by either the latest cost of inventory or the average inventory over the year,it shows how efficiently companies turn their inventory into sales

51
Q

EBITDA

A

A computation of a firm’s earnings before interest,taxes,depreciation,and amortization are deducted.

52
Q

interest coverage ratio or times interest earned (TIE) ratio

A

An assessment by lenders of a firm’s leverage,it is equal to a measure of earnings divided by interest.

53
Q

return on equity (ROE)

A

The ratio of a firm’s net income to the book value of its equity.

54
Q

return on assets (ROA)

A

The ratio of net income to the total book value of the firm’s assets.

55
Q

DuPoint Identity

A

Expresses return on equity as the product of profit margin,asset turnover, and a measure of leverage.

56
Q

equity multiplier

A

measure of leverage equal to total assets divided by total equity.

57
Q

price-earnings ratio (P/E)

A

The ratio of the market value of equity to the firm’s earnings,or its share price to its earnings per share.

58
Q

PEG ratio

A

The ratio of a firm’s P/E to its expected earnings growth rate.

59
Q

statement of cash flows

A

An accounting statement that shows how a firm has used the cash it earned during a set period.

60
Q

capital expenditures

A

Purchases of new property,plant,and equipment.

61
Q

retained earnings

A

The difference between a firm’s net income and the amount it spends on dividends.

62
Q

payout ratios

A

The ratio of a firm’s dividends to its net income.

63
Q

management discussion and analysis (MD&A)

A

preface to the financial statements in which a company’s management discusses the recent year (or quarter),providing a background on the company and any significant events that may have occurred.

64
Q

off-balance sheet trans- actions

A

Transactions or arrangements that can have a material impact on a firm’s future performance yet do not appear on the balance sheet.

65
Q

statement of stockholders’ equity

A

An accounting statement that breaks down the stockholders’ equity computed on the balance sheet into the amount that came from issuing new shares versus retained earnings

66
Q

Sarbanes-Oxley Act (SOX)

A

Legislation passed by Congress in 2002, intended to improve the accuracy of financial information given to both boards and to share- holders.

MOS 2310: Finance (7 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions