Test 4 Flashcards
Cash Flow on total assets
Ration of operating cash flow to average total assets; not sensitive to income recognition and measurement; partly reflects earnings quality
=CF from Ops/Avg Total Assets
Direct Method
Presentation of net cash from operating activites for the statement of cash flows that lists major operating cash receipts less major operating cash payments.
Financing Activities
Transactions with owners and credits that include obtaining cash from issuing debt, repaying amounts borrowed and obtaining cash from or distributing cash to owners.
Indirect Method
Presentation that reports net income and then adjusts it by adding and subtracting items to yield net cash from operating activities on the statement of cash flows.
Investing Activities
Transactions that involve purchasing and selling of long-term assets, includes making and collecting notes receivable and investments in other than cash equivalents.
Operating Activities
Activities that involve the productions or purchase of merchandise and the sale of goods or services to customers, including expenditures related to administering the business.
Statement of Cash Flows
Financial statement that lists cash inflows and outflows during a period; arranged by operating, investing and financing.
Business Segment
Part of a company that can be separately identified by the products or services that it provides or by the geographic markets that it serves.
Efficiency
Company’s productivity in using its assets; usually measured relative to how much revenue a certain level of assets generates.
Extraordinary Gains & Losses
Both unusual and infrequent
Horizontal Analysis
Comparison of a company’s financial conditions and performance across time.
Liquidity
Availability of resources to meet short-term cash requirements.
Unusual Gains & Losses
Abnormal or unrelated to the company’s ordinary activities and environment.
Working Capital
CA-CL
Solvency
Company’s long-run financial viability and its ability to cover long-term obligations.
