Chapter 13 Key terms and definitions Flashcards
What is a business segment?
Part of a company that can be separately identified by the products or services that it provides or by the geographic markets that is serves; also called segment.
What is a common size financial statement?
Statement that expresses each amount as a percent of a base amount. In the balance sheet, total assets is usually the base and is expresses as 100%. In the income statement, net sales is usually the base.
What are comparative financial statements?
Statement with data for two or more successive periods placed in side by side columns, often with changes shown in dollar amounts and percents.
What is efficiency?
Company’s productivity in using its assets; usually measured relative to how much revenue a certain level of assets generates.
What is equity ratio?
Portion of total assets provided by equity, computed as total equity divided by total assets.
What are extraordinary gains and losses?
Gains or losses reported separately from continuing operations because they are both unuaual and infrequent.
What is financial reporting?
Process of communicating information relevant to investors, creditors, and others in making investment, credit, and business decisions.
What is financial statement analysis?
Application of analytical tools to general purpose financial statements and related data for making business decisions.
What is a general purpose financial statement?
Statements published periodically for use by a variety of interested parties; includes the income statement, balance sheet, statement of owners equity, statement of cash flows, and notes to these statements.
What is horizontal analysis?
Comparison of a company’s financial condition and performance across time.
What is an infrequent gain or loss?
Gain or loss not expected to recur given the operating enviroment of the business.
What is liquidity?
Availability of resources to meet short term cash requirements.
What are market prospects?
Expectations about a companys future performance as assessed by users and other interested parties.
What is profitability?
Company’s ability to generate an adequate return on invested capital.
What is ration analysis?
Determination of key realtions between financial statements items as reflected in numerical measures.
