ratio stuff terms Flashcards

1
Q

Accounts payable:

A

Amounts the firm owes for credit purchases due within a year. This account is the liability counterpart of accounts receivable

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2
Q

Notes payable:

A

Short-term loans from banks, suppliers, or others that must be repaid within a year. For example, Delicious Desserts has a six-month, $15,000 loan from its bank that is a note payable.

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3
Q

Accrued expenses:

A

Expenses, typically for wages and taxes, that have accumulated and must be paid at a specified future date within the year although the firm has not received a bill.

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4
Q

Income taxes payable:

A

Taxes owed for the current operating period but not yet paid. Taxes are often shown separately when they are a large amount.

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5
Q

Current portion of long-term debt

A

Any repayment on long-term debt due within the year. Delicious Desserts is scheduled to repay $5,000 on its equipment loan in the coming year

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6
Q

Debt ratios

A

measure the degree and effect of the firm’s use of borrowed funds (debt) to finance its operations.

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7
Q

Activity ratios

A

measure how well a firm uses its assets

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8
Q

Earnings per share (EPS)

A

is the ratio of net profit to the number of shares of common stock outstanding.

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9
Q

.Profitability ratios

A

measure how well the firm is using its resources to generate profit and how efficiently it is being managed

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10
Q

The ratio of net profit to net sales is the

A

net profit margin,

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11
Q

Net working capital,

A

though not really a ratio, is often used to measure a firm’s overall liquidity.

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12
Q

Theacid-test (quick) ratio

A

is like the current ratio except that it excludes inventory, which is the least-liquid current asset.

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13
Q

Thecurrent ratio

A

is the ratio of total current assets to total current liabilities

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14
Q

Liquidity ratios

A

measure the firm’s ability to pay its short-term debts as they come due.

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