T4-4 Flashcards
1
Q
retained earnings
A
a. net income retained in the corporation
2
Q
stock options
A
a. Gives employees the option to buy stock at a fixed price for a certain period of time
3
Q
horizontal analysis
A
a. Always compares 2 years
b. Illustrates direction and provides trend indicators
4
Q
vertical analysis
A
a. involves only 1 year
b. percentage that each line item represents of base number
5
Q
earnings per share
A
a. Amount of net income earned for each share of common stock held by owners, important measure of profitability
b. Net income/average number of common shares
6
Q
price earnings ratio
A
a. Indicates how much investors are willing to pay per dollar of current earnings
b. Market price per share/earnings per share
