CIS201-Exam 1

STUDY
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Terms in this set (...)

Budget
an estimate of income, expenses and profit for a given period of time, most often a year
What-If Analysis
Allows you to use various assumption values to predict and analyze the impact of theses assumptions on Income Expenses and Profit; Also called a Sensitivity Analysis
Automatic Recalculation
A formula will automatically update values in the formula ad recalculate the result if the values in any of the cell addresses use in that formula change
Line Item
Each row in a budget
Distributers
the Link between manufacturers and a retailer
Retailers
Sell the products they buy from distributors directly to consumers
Consumers
The final stop for the product
Gross Profit Formula
Total Income - Total Cost of Goods Sold
Profit Before Taxes Formula
Gross Profit-Total Expenses
Assumption Value
a best-guess percentage that applies an increase or decrease to actual income and expense items
Income Statement
an actual record of the income and expenses for a company during a given period of time
Primary Purpose of Income Statement
to show stockholders how much money the company made or lost during the specified period
CFO
traditionally responsible for creating and maintaining the company's income statement
Profit & Loss Statement
Another name for an Income Statement
Accounts Receivable
Customers promise to pay for goods and services
Accounts Payable
payment obligations that the company has not yet fulfilled
Operating Income
Total Revenues-Total Expenses
EBIT
Earnings Before Interest in Tax
IBIT
Income Before Income Taxes
EPS
Earnings Per Share
EPS Formula
Net Income/ # of Common Stocks Outstanding
What EPS is used For
To determine the future price of a company's stock
Price to Earnings Ratio
the price of one share of stock divided by the earnings per share (EPS)
Dividends
the amount of money actually paid to shareholders
##########
The Column is too narrow to display value
#DIV/0
The formula is attempting to divide by 0
#Name?
The formula contains text that is incorrect
#Null!
Excel Cannot read the forumla
#Ref!
The formula references a cell address that cannot be found. Occurs when one of the cell addresses is deleted from a formula
#Value!
Entering a formula that adds a cell with a number to a cell that contains text would create this error
Balance Sheet
Summarizes a company's assets, liabilities, and Stockholders Equity at a specific time (A=L+SH)
Asset
Any resource the company owns
Liabiltiy
Represents debt that the company must pay
Equity
Represents ownership in the business
Another name for Balance Sheet
Statement of Financial Condition
Non-Current Assets
Take longer than a year to convert into cash

Considered Long-Term assets or Fixed Assets
Depreciation
an accounting method of allocating the cost of a tangible asset over the useful life of the item
Intangible Asset
A trademark, copyright, or patent
Goodwill
the premium amount a buyer would pay to purchase a company above the value of the other assets minus the liabilities on the balance sheet
Current Liabilties
Accounts Payable, Wages Payable, Interest Payable, and Taxes Payable
Non-Current Liabilities
Long-term Loans and Bonds
Working Capital
Total Current Assets-Total Current Liabilties
Current Ratio
Total Current Assets/Toal Current Liabilties
Quick (Acid Test) Ratio
(Cash+Accounts Receivable+Short-term investments)/Total Current Liabilties
Total Debt Ratio
Total Liabilities/Total Assets
AR Turnover Ratio
Sales/Accounts Receivable
Inventory Turnover Ratio
Sales/Inventory
Asset Turnover Ratio
Sales/Total Assets
Cash Flow Analysis
lists the cash inflows and outflows to a business over a period of time
Cash Transactions
Deposits and withdraws from the business Checking account
Liquidity
the ability to convert an asset into cash
Financing
when a business borrows money to purchase large acquisitions such as land, building or expensive equipment
Time Value of Money
means that money avalible now is worth more than the same amount of money realized in the future because that money can be invested to make more money
Monthly Payment Formula
P(i/12)/(1-(1+i/12)^-n) where P=Principle, I=Annual Interest Rate, and n=# of monthly Payments
PMT Function in Excel
PMT(rate,nper,pv)
Present Value
the value today of a future value or a series of payments
Future Value
the value of an asset at a specified time in the future