Chapter 15 Flashcards
Ratio that measures the number of times the company collects the average accounts receivable balance in a year
Accounts Receivable Turnover Ratio
Ratio that tells if the entity can pay all its current liabilities if they became due immediately
Acid-Test Ratio
Required by the SEC, provides information about company’s financial condition
Annual Report
Measures how efficiently a business uses it average total assets to generate sales
Asset Turnover Ratio
Practice of comparing a company with other leading companies
Benchmark
Measure of a company’s ability to pay current liabilities from cash and cash equivalents
Cash Ratio
Financial statement that reports only percentages
Common-Size Statement
Measure’s the company’s ability to pay current liabilities from current assets
Current Ratio
Measures the average number of days that inventory is held by a company
Days’ Sales in Inventory
Ratio that tells how many days it takes to collect the average level of accounts receivable
Days’ Sales in Receivables
Shows the proportion of assets financed with debt
Debt Ratio
Ratio that measures the proportion of total liabilities relative to total equity
Debt to Equity Ratio
Ratio of dividends declared per common share relative to the earnings per share of the company
Dividend Payout
Measures the percentage of a stock’s market value that is returned annually as dividends to stockholders
Dividend Yield
Bias one sees from comparing numbers in absolute (dollars) rather than relative (percentage) terms
Dollar Value Bias
Amount of a company’s net income for each share of its outstanding common stock
Earnings per Share
Measures the profitability of each sales dollar above the cost of goods sold
Gross Profit Percentage
Study of percent change in comparative financial statements
Horizontal Analysis
Measures the number of times a company sells its average level of merchandise inventory during a period
Inventory Turnover
Section of the annual report that is intended to help investors understand the results of operations and the financial condition of the company
Management’s Discussion and Analysis
Measures the values the the stock market place on $1 of a company’s earnings
Price/Earnings Ratio
Profitability measure that shows how much net income is earned on every dollar of net sales
Profit Margin Ratio
Shows relationship between net income available to common stockholders and their average common equity invested in the company
Rate of Return on Common Stockholders’ Equity
Ratio that measures the success a company has in using its assets to earn income
Rate of Return on Total Assets
