finance quiz Flashcards
Expression of logical relationships between items in a financial statement of a single period (e.g., percentage relationship between revenue and net income)
ratio analysis
Show changes over time in given financial statement items (can help evaluate financial information of several years)
trend percentages
Financial statements that show only percentages and no absolute dollar amounts
common-size statements
For a single financial statement, each item is expressed as a percentage of a significant total, e.g., all income statement items are expressed as a percentage of sales
vertical analysis
Using comparative financial statements to calculate dollar or percentage changes in a financial statement item from one period to the next
horizontal analysis
internal users use financial statement analysis
planning, evaluating and controlling company operations
Information found in the different financial statements
BI
balance sheet
income statement or profit of loss statement
cash flow statement
statement of changes of equity
Information found in the different financial statements
BI
balance sheet
income statement or profit of loss statement
cash flow statement
statement of changes of equity
shows a company’s revenue, expenses, and net income (or loss) over a specific period of time. It provides information about a company’s profitability and can help investors assess the company’s financial health.
income statement
provides a snapshot of a company’s financial position at a specific point in time. It shows a company’s assets (what it owns), liabilities (what it owes), and equity (the difference between assets and liabilities). This statement helps investors understand the company’s financial strength and ability to meet its obligations.
balance sheet
shows a company’s inflows and outflows of cash over a specific period of time. It provides information about a company’s liquidity and ability to generate cash. This statement also helps investors assess a company’s ability to pay dividends and invest in future growth
cash flow statement
changes in a company’s equity over a specific period of time. It provides information about the company’s retained earnings, additional paid-in capital, and other changes in equity. This statement is useful for investors who want to understand how a company’s equity has changed over time.
statement of changes in equity
amount of money a company earns from the sale of its products or services.
revenue
direct costs associated with producing and delivering a company’s products or services.
cogs
cost of goods sold
difference between revenue and cost of goods sold and represents the profit a company makes before deducting operating expenses.
revenue - cogs
gross proft
expenses associated with running a company, such as salaries, rent, utilities, marketing, and research and development.
operating expenses
profit a company makes after deducting operating expenses from gross profit.
gross profit - operating expenses
operating income
expenses that are not directly related to a company’s core business operations but must be paid nonetheless.
interest and taxes
profit a company makes after deducting all expenses from revenue, including interest and taxes.
net income
assets that are expected to be converted into cash or used up within one year, such as cash, accounts receivable, inventory, and prepaid expenses.
current assets
assets that are expected to provide economic benefits to the company for more than one year, such as property, plant, and equipment, long-term investments, and intangible assets.
non-current assets
obligations that are expected to be settled within one year, such as accounts payable, accrued expenses, and short-term loans
current liabilities
obligations that are not due within one year, such as long-term debt, deferred tax liabilities, and pension liabilities.
non-current liabilities
represents the residual interest in the assets of the company after deducting its liabilities. It includes common stock, additional paid-in capital, retained earnings, and accumulated other comprehensive income.
shareholders’ equity
trepresents the portion of equity in a subsidiary not attributable to the parent company.
non-controlling interest
shows the cash inflows and outflows from the company’s primary business activities, such as sales and purchases of goods and services, payments to suppliers, and collections from customers. It also includes adjustments for non-cash items such as depreciation and changes in working capital.
operating activities
the cash inflows and outflows related to the company’s investments in long-term assets, such as property, plant, and equipment, and financial investments such as stocks and bonds. It includes purchases and sales of these assets, as well as any income or expenses related to them.
investing activities
shows the cash inflows and outflows related to the company’s financing activities, such as issuing or repurchasing stock, paying dividends, borrowing or repaying loans, and other financing activities. It also includes any effects of foreign exchange rate changes on cash and cash equivalents.
financing activities
represents the amount of equity at the beginning of the period,
which is typically the same as the ending equity from the previous period.
beginning equity
shows the amount of capital raised by the company from the issuance of new stock, including the number of shares issued and the price per share.
issuance of stock
shows the company’s net income or loss for the period, which is determined by subtracting expenses from revenues. Net income increases equity, while net losses decrease equity.
net income
shows the amount of dividends paid to shareholders during the period. Dividends are a distribution of profits to shareholders and decrease equity.
dividend
shows any gains or losses that are not included in net income, such as gains or losses from foreign currency translation or changes in the value of available-for-sale securities.
other comprehensive income
total equity at the end of the period, which is calculated by adding the beginning equity to the changes in equity during the period.
ending equity
