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- 1Common-size analysisrequires users to compute the percentage amounts of each item on the financial statement relative to a base amount.
- 2How are items on the BS expressed?As a % of total assets
- 3How are items on the IS expressed?As a % of total rev.
- 4Rate of change analysiscomputing the percentage rate change in a company’s financial position and performance over time
- 5The rate of change analysis cannot be used if what?The base period is zero or less than zero
- 6Financial Statement analysis ratiosrepresent relationships between and among items on the financial statements
- 7Rate of return on investmentmeasures how profitably a company uses its resources
- 8Common ratios include what?the return on assets & return on common equity
- 9return on assets formula:net income + [int.exp X (1-tax rate)] divided by avg total assets
- 10return on common equity formula:net income dived by avg tot. common equity
- 11Financial leveragethe amount of debt financing, relative to the equity and total assets of the company
- 12standard ratios that measure the levarage include:debt-to-assets ratio and the debt-to-equity ratio
- 13debt-to-asset ratiomeasure the % of total assets financed by creditors
- 14debit-to-assest formula:total liab/total assets
- 15debt-to-equity ratiomeasures the number of dollars of debt financing per dollar of financing from total common shareholders’ equity
- 16debt-to-equity formula:total liab/total equity
- 17Liquidity ratios indicate a company's ability to what?meet its currently maturing financial obligations
- 18Working capitalcurrent assets - current liabilties
- 19current ratio formula:current assets/ current liabilites
- 20most commonly used ratio to evaluate liquidity:current ratio
- 21quick ratio formula:quick assets/current liabilties
- 22quick assets can be converted into cash with how many days?90
- 23Operating capabilitiy ratiosused to evaluate the efficiency with which the company uses its economic resources to generate revenues
- 24How are operating capability ratios measured?In terms of the # of days of activity that inventory, receivables or payables represent
- 25Inventory turnover ratiothe average number of times the inventory “turned over” or sold during that period and is computed
- 26Inventory turnover formula:cost of goods sold- avg inventory
- 27inventory turnover in days formula:365 days / inventory turnover
- 28AR turnover formula:total credit sales/avg AR
- 29AP turnover formula:inventory purchases/avg ap
- 30—
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- Karteikarten am Ohne Titel, erstellt von Ali Davis am 11/07/2021.
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