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Financial Management > Module 2 > Flashcards

Module 2 Flashcards

1
Q

What are the Key Financial Statements?

A

Income Statement
Balance Sheet
Statement of Retained Earnings
Statement of Cash Flows

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2
Q

The ____ provides a financial summary during a specified period.

A

Income Statement

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3
Q

The Operating Profit is often called

A

Earning Before Interest or EBIT

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4
Q

The actual cash ____ is the dollar amount of cash distributed during the period on behalf of each outstanding share of common stock.

A

Dividends per share

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5
Q

____ represents the number of dollars earned during the period on behalf of each outstanding share of common stock.

A

Earnings per share or EPS

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6
Q

The ____ presents a summary of the firm’s financial positions at a given time.

A

Balance Sheet

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7
Q

_____ short term assets, expected to be convertec into cash within 1 year or less.

A

Current Asset

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8
Q

____ short term liabilities, expected to be paid within 1 year or less.

A

Current liabilities

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9
Q

____ are very liquid short-term investments such as Treasury bills or certificates of deposit, held by the firm.

A

Marketable securities

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10
Q

_____ are viewed as a form of cash (“near cash”).

A

Marketable Securities

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11
Q

____ represent the total monies owed the firm by its customers on credit sales.

A

Accounts receivable

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12
Q

____ include raw materials, work in process (partially finished goods), and finished goods held by the firm.

A

Inventories

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13
Q

The entry for _____ is the original cost of all fixed (long-term) assets owned by the firm.

A

Gross fixed assets

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14
Q

_____ represents the difference between gross fixed assets and accumulated depreciation

A

Net fixed assets

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15
Q

the net
value of fixed assets is called their _____

A

book value

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16
Q

_____ represents for which payment is not due in the current year.

A

Long-term debt

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17
Q

_____ represents the owner’s claims on the firm.

A

Stockholder’s equity

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18
Q

the ____ entry shows the historical proceed from the sale of ____.

A

preferred stock

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19
Q

_____ represent the cumulative total of all earnings, net of dividends that have been retained and reinvested in the firm since its inception.

A

Retained Earnings

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20
Q

The ____ is an abbreviated form of statement of the statement of stockholder’s equity.

A

Statement of Retained Earnings

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21
Q

The _____ is a summary of the cash flows over the period of concern.

A

Statement of Cash Flows

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22
Q

the analysis of financial statements is based on the use of ___ or _____.

A

ratios
relative values

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23
Q

_____ involves methods of calculating and interpreting financial ratios to analyze and monitor the firm’s performance.

A

Ratio analysis

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24
Q

ratios are measured as _____, _____, _____.

A

percentage
Times or multiplez
Number of days

25
Q

Ratio analysis of a firm’s financial statements is of interest to:

A

Shareholders
Prospective inventors
Creditors
Firm’s own management

26
Q

_____ involves the comparison of different firms’ financial ratios at the same point in time.

A

Cross-Sectional Analysis

27
Q

This type of ____ is called benchmarking.

A

cross-sectional analysis

28
Q

____ evaluates performance over time.

A

Time-series Analysis

29
Q

The most informative approach to ratio analysis that combines cross-sectional and time-series analysis.

A

Combined Analysis

30
Q

The ____ of a firm is measured by its ability to satisfy its short term obligations as they come due.

A

Liquidity

31
Q

____ refers to the solvency of the firm’s overall financial position— the ease with which it can pay its bills.

A

Liquidity

32
Q

the ____, one of the most commonly cited financial ratios, measured the firm’s ability to meet its short term obligations.

A

Current Ratio

33
Q

the _____ is similar to the current ratio except that it excludes inventory, which is generally the least liquid current asset.

A

Quick (acid-test) ratio

34
Q

the dept position of a firm indicates the amount of other people’s money being used to ____

A

generate profits

35
Q

_____ is the magnification of risk and return through the use of fixed-cost, such as debt and preferred stock.

A

Financial Leverage

36
Q

what are the general types of debt measures?

A

Degree of Indebtedness
Ability to service debt

37
Q

____ measures the amount of debt relative to other significant balance sheet amounts.

A

Degree of Indebtedness

38
Q

____ reflects a firm’s ability to make the payments required on a scheduled basis over the life of a debt.

A

Ability to service debts

39
Q

the term to _____ simply means to pay debts on time.

A

Service debts

40
Q

the firm’s ability to pay certain fixed charges is measured using ____

A

Coverage ratios

41
Q

the ____ measures the proportion of total assets financed by the firm’s creditors.

A

Debt Ratio

42
Q

the _____, sometimes called interest coverage ratio, measures the firm’s ability to make contractual interest payments.

A

Times interest earned ratio

43
Q

the ____ measures the firm’s ability to meet all fixed payment obligations.

A

Fixed-payment coverage ratio

44
Q

These measures enable analysts to evaluate the firm’s profits with respect to a given level of sales.

A

Profitability Ratios

45
Q

a useful tool for evaluating profitability in relation to sales is the ____.

A

Common-size income statement.

46
Q

the _____ measures the percentage of each sales dollar remaining after the firm has paid for its goods.

A

gross profit margin

47
Q

the _____ measures the percentage of each sales dollar remaining after all costs and expenses other than interest, taxes, and preferred stock dividends are deducted.

A

Operating Profit Margin

48
Q

the ____ measures the percentage of each sales dollar remaining after all costs and expenses, including interest, taxes, and preferred stock dividends, have been deducted.

A

Net Profit Margin

49
Q

the firm’s _____ is generally of interest to present or prospective stockholders and management.

A

Earnings per share

50
Q

The dollar anount of cash actually distributed to each shareholder is the _____.

A

Dividend per share

51
Q

the return on total assets (ROA) often called the _____

A

Return of Investment (ROI)

52
Q

the ____ often called the return on investment (ROI) measures the overall effectives of management in generating profits with its available assets.

A

Return on Total Assets

53
Q

the ____ measures the return earned on the common stockholders’ investment in the firm.

A

Return on common equity

54
Q

____ relate the firm’s market value, as measured by its current share price to certain accounting values.

A

Market Ratios

55
Q

The ____ is commonly used to assess the owners’ appraidal of share value.

A

Price/Earning (P/E) Ratio

56
Q

the ____ measures the amount that investors are willing to pay for each dollar of a firm’s earnings.

A

(P/E) ratio

57
Q

the ____ provides an assessment of how investors view the firm’s performance.

A

market/book (M/B) ratio

58
Q

A higher Current ratio indicates a greater degree of _______

A

liquidity

Financial Management (4 decks)

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