General Purpose Financial Statements - Notes to Financial Statements Flashcards
What are the basic disclosures required in the Financial Statements?
Summary of Significant Accounting Policies Related Party Transactions Development Stage Enterprises Liability Disclosures Capital Structure Errors & Irregularities Illegal Acts/Legal Procedures
What is the MD&A and what is required within it?
Management’s Discussion and Analysis
Required for publicly held firms
Includes a discussion about operations, liquidity and capital resources
What are the IFRS differences inf the Footnotes to the Financial Statements?
Footnotes should be in same order as F/S items
Must disclose proposed dividends
Required to state price level in Hyperinflationary countries
What are the 4 types of financial ratios?
1) Liquidity/Solvency: Measures ability to meet maturing obligations
2) Operational: Measures the EFFICIENCY of operations
3) Profitability: Measures operational RESULTS
4) Equity: Measures Equity
What is the calculation of Working Capital?
= Current Assets - Current Liabilities
What is the current ratio?
A Liquidity/Solvency ratio
= Current Assets / Current Liabilities
What is the Acid aka Quick Ratio?
A Liquidity/Solvency ratio
= Cash+AR+Marketable Securities / Current Liabilities
What is the Times Interest Earned Ratio?
A Liquidity/Solvency ratio
Measures ability of current earnings to cover interest costs for the period
= Net Income+Interest Exp+Income Tax Exp / Interest Exp
What is the Inventory Turnover ratio?
Operational ratio
measures avg. # of days inventory is sold or used
= 365 / (COGS / Avg. Inv.)
What is the Account Receivable Turnover ratio?
Operational ratio
measures avg. # of days it takes to collect receivables
= 365 / (Net credit sales / Avg. A/R)
What is the Profit Margin ratio?
Profitability ratio
measures net profitability on sales
= Net Income / Sales
What is the Return on Assets ratio?
Profitability ratio
measures net income earnings per avg. asset
= Net Income / Avg. Total Assets
What is the Return on Equity ratio?
Profitability ratio
measures rate of earnings on common shareholder’s investment
= Net Income / Avg. Common Stockholder’s Equity
What is the Earnings Per Share ratio?
Profitability ratio
= Net Income - Preferred Dividends / Weighted avg. common shares outstanding
What is the Price to Earnings ratio?
Profitability ratio
= Stock Price per share / EPS
