Finance Flashcards
What is the Quick Ratio?
It indicates the company’s short-term liquidity position. How well it is able to pay off its short term loans
What is the Quick Ratio formula?
Current assets - Stock / Short Term Loan Capital
What should the Quick Ratio be?
Higher than 1,0
What is Solvency?
Solvency indicates how well a company is able to absorb its losses.
What does good Solvency mean?
That a company is able to absorb a good amount of losses and through that, that it can attract loans, sponsors, and investors
What is considered good Solvency?
For a starting company: 40% and higher
For an established company: 20% and higher
What is the Solvency formula?
Equity/Total Assets
What is Return on Equity?
Return on Equity tells us how good a company is at generating profit. Making money out of money
What is a good ratio for Return on Equity?
Acceptable ratio: 14%
Anything under 10% is poor
What is the Return on Equity formula?
Profit/Average Equity Capital * 100%
What is the Current Ratio?
A liquidity ratio that measures if a company has enough resources to meet its short-term obligations
What should the Current Ratio be?
Between 1,5- 4
What is the Current Ratio formula?
Current Assets/Current Liabilities
What is Net Working Capital?
The difference between a company’s current assets and current liabilities. Shows if a company can covet its current liabilities with its current assets in order to show if an investment is possible
What is a good Net Working Capital?
One that is positive, meaning that there is money over when the current liabilities are covered
What is the Net Working Capital formula?
Current Assets-Current Liabilities
What is Gross Profit as a percentage of the Turnover?
It shows how much of the Turnover is Non-taxed Profit
What is Gross Profit?
Revenue- Purchase Value
What is the formula for Gross Profit as a percentage of the Turnover?
Gross Profit (Revenue-Purchase Value)/Revenue *100%
How does one calculate the VAT % of a gross amount?
- Gross amount/ 1. Vat %
2. Subtract the resulting amount from the gross amount
How does one add VAT % to a net amount?
Multiply the net amount by 1. VAT %.
Which 4 points should be included when creating a digital form?
Entry Data, Monitoring Data, Authorization Data and Processing Data
What are some examples of Entry Data?
Name, Address, Social Security number
What are some examples of Monitoring Data?
Check on zip code, Employment Agency Number, Worked for the company before
What are some examples of Authorization Data?
Name+approval (signature) of decision maker
What are some examples of Processing Data?
Date, hours worked, who entered the data
What code do Fixed Assets, Shareholders Equity, and Long -Term Debt have?
0
What code do Liquid Assets (Except Stock), and Short-Term Debt have?
1
Which code does Stock have?
3
Which code do Costs have?
4
What code do Turnover and Costs of Sales have?
8
What code do Other Results have?
9
How are journal entries for Asset Accounts produced?
Everything that is added/gained by the asset account is increased on the debit side.
Everything that is taken from/withdrawn from the asset account is displayed on the credit side.
How are journal entries for Liability and Equity Accounts Produced?
Everything that is taken from/withdrawn/paid off from the liability and equity accounts, decreases on the debit side
Everything that is added/gained by the liability or equity account increases on the credit side
