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FDNBUSF (Chapter 2 Quiz)

Terms in this set (20)

Annual Report
A report issued annually by a corporation to its stockholders
Balance Sheet
A statement of the firm's financial position at a specific point in time
Income Statement
A statement summarizing the firm's revenues and expenses over an accounting period, generally a quarter or a year
Statement of Cash Flows
A statement reporting the impact of a firm's operating, investing and financing activities on cash flows over an accounting period
Operating Activities
It involves the cash effects of transactions that enter into the determination of net income
Investing Activities
Generally involves long term assets and include making and collecting loans, acquiring and disposing of investments and productive long lived assets
Financing Activities
Involve liability and stock holder's equity items and include obtaining cash from creditors and repaying the amounts borrowed
Statement of Retained Earnings
A statement reporting changes in the firms as a result of the income generated and retained during the year; is the sum of the earnings retained for each year the firm has been in business
Liquid Asset
An asset that can be easily converted into cash without significant loss of its original value
Liquidity Ratios
Ratios that relate the firm's cash and other assets to its current liabilities; indicate how well a firm can meet its current obligations
Current Ratio
Indicated the extent to which current liabilities are converted by assets expected to be converted into cash in the near future
Quick (acid test) Ratio
Deducts inventories from current assets and divides the remainder by current liabilities
Asset Management Ratios
Ratios that measure how effectively a firm is managing its assets
Debt Management Ratios
Analyze the company's use of debt
Financial Leverage
The use of debt financing
Profitability Ratios
Ratios showing the effect of liquidity, asset management, and debt management on operating results
Market Value Ratios
Ratios that relate the firm's stock price to its earnings and book value per share
Trend Analysis
An analysis of a firm's financial ratios over time; used to determine improvement or deterioration in its financial situation
The Du Pont Analysis
An analysis designed to show the relationships among return on investment, asset turnover, profit margin and leverage
Comparative Ratio Analysis
An analysis based on a comparison of a firm's ratios with those other firms in the same industry
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