Flashcards in Ch 2 - Intro to Financial Statement Analysis Deck (66)
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
The yearly summary of business, accompanying or including financial statements,sent by U.S.public companies to their stockholders.
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
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
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.
The cash,inventory,property,plant and equipment,and other investments a company has made
firm's obligations to its creditors
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
common stock and paid- in surplus
The amount that stockholders have directly invested in the firm through purchasing stock from the company
Profits made by the firm,but retained within the firm and reinvested in assets or held as cash.
Cash or assets that could be converted into cash within one year
Short-term, low-risk investments that can be easily sold and converted to cash
Amounts owed to a firm by customers who have purchased goods or services on credit.
A firm’s raw materials as well as its work-in-progress and finished goods.
Assets that produce tangible benefits for more than one year
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.
The acquisition cost of an asset less its accumulated depreciation
Liabilities that will be satisfied within one year
The amounts owed to creditors for products or services purchased with credit
notes payable,short- term debt
Loans that must be repaid in the next year
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.
Any loan or debt obligation with a maturity of more than a year
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.
The total market value of equity; equals the market price per share times the number of shares
The value of a firm after its assets are sold and liabilities paid.
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
Firms with low market-to-book ratios
Firms with high market-to-book ratios
A measure of the extent to which a firm relies on debt as a source of financing