Ch 2 - Intro to Financial Statement Analysis Flashcards Preview

MOS 2310: Finance > Ch 2 - Intro to Financial Statement Analysis > Flashcards

Flashcards in Ch 2 - Intro to Financial Statement Analysis Deck (66)
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1

financial statements

Accounting reports issued by a firm quarterly and/or annually that present past performance information and a snapshot of the firm’s assets and the financing of those assets

2

annual reports

The yearly summary of business, accompanying or including financial statements,sent by U.S.public companies to their stockholders.

3

Generally Accepted Accounting Principles (GAAP)

A common set of rules and a standard for- mat for public companies to use when they prepare their financial reports

4

auditor

A neutral third party,which corporations are required to hire,that checks a firm’s annual financial statements to ensure they are prepared according to GAAP,and provides evidence to sup- port the reliability of the information

5

balance sheet

A list of a firm’s assets and liabilities that provides a snapshot of the firm’s financial position at a given point in time.

6

assets

The cash,inventory,property,plant and equipment,and other investments a company has made

7

liabilities

firm's obligations to its creditors

8

shareholders’ equity, stockholders’ equity

An accounting measure of a firm’s net worth that rep- resents the difference between the firm’s assets and its liabilities

9

common stock and paid- in surplus

The amount that stockholders have directly invested in the firm through purchasing stock from the company

10

retained earnings

Profits made by the firm,but retained within the firm and reinvested in assets or held as cash.

11

current asset

Cash or assets that could be converted into cash within one year

12

marketable securities

Short-term, low-risk investments that can be easily sold and converted to cash

13

accounts receivable

Amounts owed to a firm by customers who have purchased goods or services on credit.

14

inventories

A firm’s raw materials as well as its work-in-progress and finished goods.

15

long-term assets

Assets that produce tangible benefits for more than one year

16

depreciation

A yearly deduction a firm makes from the value of its fixed assets (other than land) over time,according to a depreciation schedule that depends on an asset’s life span.

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book value

The acquisition cost of an asset less its accumulated depreciation

18

current liabilities

Liabilities that will be satisfied within one year

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accounts payable

The amounts owed to creditors for products or services purchased with credit

20

notes payable,short- term debt

Loans that must be repaid in the next year

21

net working capital

The difference between a firm’s current assets and current liabilities that rep- resents the capital avail- able in the short term to run the business.

22

long-term debt

Any loan or debt obligation with a maturity of more than a year

23

book value of equity

The difference between the book value of a firm’s assets and its liabilities; also called shareholders’ equity and stockholders’ equity ,it represents the net worth of a firm from an accounting perspective.

24

market capitalization

The total market value of equity; equals the market price per share times the number of shares

25

liquidation value

The value of a firm after its assets are sold and liabilities paid.

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market-to-book ratio (price-to-book [P/B] ratio

The ratio of a firm’s market (equity) capitalization to the book value of its stockholders’ equity

27

value stocks

Firms with low market-to-book ratios

28

growth stocks

Firms with high market-to-book ratios

29

leverage

A measure of the extent to which a firm relies on debt as a source of financing

30

debt-equity ratio

The ratio of a firm’s total amount of short-and long-term debt (including current maturities) to the value of its equity,which may be calculated based on market or book values