FSA Flashcards
Accelerated methods
Depreciation methods that allocate a relatively large proportion of the cost of an asset to the early years of the asset’s useful life.
Accounting profit
Income as reported on the income statement in accordance with prevailing accounting standards before the provisions for income tax expense.
Accounts payable
Amounts that a business owes to its vendors for goods and services that were purchased from them but which have not yet been paid.
Accrued expenses
Liabilities related to expenses that have been incurred but not yet paid as of the end of an accounting period—an example of an accrued expense is rent that has been incurred but not yet paid resulting in a liability “rent payable.”
Acquisition method
A method of accounting for a business combination where the acquirer is required to measure each identifiable asset and liability at fair value. This method was the result of a joint project of the IASB and FASB aiming at convergence in standards for the accounting of business combinations.
Activity ratios
Ratios that measure how efficiently a company performs day-to-day tasks such as the collection of receivables and management of inventory.
Amortisation
The process of allocating the cost of intangible long-term assets having a finite useful life to accounting periods; the allocation of the amount of a bond premium or discount to the periods remaining until bond maturity.
Amortised cost
The historical cost (initially recognised cost) of an asset adjusted for amortisation and impairment.
Antidilutive
With reference to a transaction or a security one that would increase earnings per share (EPS) or result in EPS higher than the company’s basic EPS— antidilutive securities are not included in the calculation of diluted EPS.
Asset utilization ratios
Ratios that measure how efficiently a company performs day-to-day tasks such as the collection of receivables and management of inventory.
Assets
Resources controlled by an enterprise as a result of past events and from which future economic benefits to the enterprise are expected to flow.
Available-for-sale
Under US GAAP debt securities not classified as either held-to-maturity or held-for-trading securities. The investor is willing to sell but not actively planning to sell. In general available-for-sale debt securities are reported at fair value on the balance sheet with unrealized gains included as a component of other comprehensive income.
Back-testing
With reference to portfolio strategies the application of a strategy’s portfolio selection rules to historical data to assess what would have been the strategy’s historical performance.
Balance sheet
The financial statement that presents an entity’s current financial position by disclosing resources the entity controls (its assets) and the claims on those resources (its liabilities and equity claims) as of a particular point in time (the date of the balance sheet).
Balance sheet ratios
Financial ratios involving balance sheet items only.
Basic EPS
Net earnings available to common shareholders (i.e. net income minus preferred dividends) divided by the weighted average number of common shares outstanding.
Bottom-up analysis
An investment selection approach that focuses on company-specific circumstances rather than emphasizing economic cycles or industry analysis.
Capital structure
The mix of debt and equity that a company uses to finance its business; a company’s specific mixture of long-term financing.
Carrying amount
The amount at which an asset or liability is valued according to accounting principles.
Cash conversion cycle
A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to days of inventory on hand + days of sales outstanding – number of days of payables.
Cash flow from operating activities
The net amount of cash provided from operating activities.
Cash flow from operations
The net amount of cash provided from operating activities.
Classified balance sheet
A balance sheet organized so as to group together the various assets and liabilities into subcategories (e.g. current and noncurrent).
Common shares
A type of security that represent an ownership interest in a company.