5 Written questions
5 Matching questions
- Profit margin
- Other assets
- Financing activities
- Percent-of-sales method
- Owner's equity
- a the equity invested in the business by the owners plus the accumulated earnings retained by the business after paying dividends.
- b miscellaneous assets, including accumulated goodwill.
- c include cash raised during the period by borrowing money or selling stock and/or cash used during the period by paying dividends, buying back outstanding stock, or buying back outstanding bonds.
- d a method for expressing each expense item as a percentage of sales.
- e or return on sales, is computed by dividing net income by net sales.
5 Multiple choice questions
- a report similar to the annual report except that it contains more detailed information about the company's business.
- a simple ratio that measures the price of a company's stock against its earnings.
- provides a firm a sense of how its activities will affect its ability to meet its short-term liabilities and how its finances will evolve over time.
- point where total revenue received equals total costs associated with the output or sale of the product.
- the ability to earn a profit.
5 True/False questions
Pro forma financial statements → projections for future periods based on forecasts and are typically completed for two to three years in the future.
Income statement → a written report that quantitatively describes a firm's financial health.
Operating expenses → include marketing, administrative costs, and other expenses not directly related to producing a product or service.
Constant ratio method of forecasting → if a firm uses percent-of-sales method, then the net result that each expense item (except depreciation) on its income statement will grow at the same rate as sales.
Stability → a company's ability to meet its short-term financial obligations.