Key Exam Cards Flashcards
Liquidity
Takes into account both the current and quick ratios
Current ratio
Hows the ability of the business to meet its obligations in the ordinary course of business.
Quick ratio
Shows the ability of the business to meet obligations if pressure is put on them to pay, excludes inventory.
Inventory turnover
The higher the better. Represents how well inventory is coming in and going out of the business.
Gross Profit Percentage
Shows how much is left from every dollar of sales to cover overheads and profit. A reduction indicates that selling price has decreased or cost price has increased.
Net Profit Percentage
A reduction may be a result of higher expenses and costs of goods sold.
Contribution Margin
Selling price - expenses
Break even point
Fixed costs divided by contribution margin per unit
Target Profit
(Fixed costs + target profit) divided by contribution margin per unit
Operating activities
Include the primary activities of buying, selling and delivering goods for sale, as well as providing services
Investing activities
Include transactions that affect investments in non-current assets of the company
Financing activities
Includes obtaining capital from the owner and providing the owner with a return on investment, as well as obtaining capital from creditors and repaying the amounts borrowed
Current ratio increase
indicates that creditors will be repaid quicker and likelihood of payment is high
Current ratio decrease
company’s ability to cover payments of short-term liabilities using its short-term assets decreases
Quick ratio increase
indicates that the business have increased their ability to use their quick assets to reduce their current liabilities
Return on Total Assets
Shows how well a business uses its resources.
Debt ratio
Shows the percentage of total assets provided by creditors. Is equal to total liabilities over total assets. The higher it its the lower the financial flexibility of the business.
Sunk cost (past cost)
Cash receipts and payments that occurred prior to the capital expenditure decision are irrelevant, because they cannot be affected by the decision
Relevant costs
Future costs that will change as a result of a decision
Sales budget
Sets the level of activity of the business during a given time period and the dollars that activity is expected to generate
Purchases budget
On what to buy and what levels of inventory to hold
Cash budget
What cash will be received from customers and when that cash will be received (the timing of collection).
Integrated Development Agenda
Has social, cultural, environmental and economic dimensions. It is based on traditional Maori/iwi beliefs and value systems
Integrated Reporting Framework
Is concerned only with six capitals: financial, manufactures, intellectual, human, social, relationship and natural. It can provide information for making decisions.
Integrated Reporting and Thinking
Is a means by which an organisation is thinking about how to make a change, by bringing down barriers. A paradigm shift is required.
Treaty settlement
Is composed of providing cultural, financial and historical redress. As well as providing historical account and acknowledgment and apology.
Perpetual/kin owned assets are
Those things that Maori would like to bequeath to future generations
Integrated Reporting Framework
Can link the Integrated Development Agenda (which s based on Maori/iwi belief and value systems
Matauranga Maori is
Based on Maori/iwi traditional beliefs and value systems
