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Accounting 18
vocab
28
Accounting
Undergraduate 1
12/03/2010

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Term
acid-test (quick) ratio
Definition
a measure of a company's immediate short-term liquidity; computed by dividing the sum of cash, short-term investments, and net receivables by current liabilities
Term
asset turnover
Definition
a measure of how efficiently a company uses its assets to generate sales; computed by dividing net sales by average assets
Term
change in accounting principle
Definition
the use of a principle in the current year that is different from the one used in the preceding year
Term
comprehensive income
Definition
includes all changes in stockholders' equity during a period except those resulting from investments by stockholders and distributions to stockholders
Term
current ratio
Definition
a measure used to evaluate a company's liquidity and short-term debt-paying ability; computed by dividing current assets by current liabilities
Term
debt to total assets ratio
Definition
measures the percentage of total assets provided by creditors; computed by dividing total debt by total assets
Term
discontinued operations
Definition
the disposal of a significant segment of a business
Term
earnings per share (EPS)
Definition
the net income earned on each share of common stock; computed by dividing net income minus preferred dividends (if any) by the number of weighted average common shares outstanding
Term
extraordinary items
Definition
events and transactions that are unusual in nature and infrequent in occurrence
Term
horizontal analysis
Definition
a technique for evaluating a series of financial statement data over a period of time, to determine the increase (decrease) that has taken place, expressed as either an amount or a percentage
Term
inventory turnover
Definition
a measure of the liquidity of inventory; computed by dividing cost of goods sold by average inventory
Term
leveraging
Definition
trading on the equity - borrowing money at a lower rate of interest than can be earned by using the borrowed money
Term
liquidity ratios
Definition
measures of the short-term ability fo the enterprise to pay its maturing obligations and to meet unexpected needs for cash
Term
payout ratio
Definition
measures the percentage of earnings distributed in the form of cash dividends; computed by dividing cash dividends by net income
Term
price-earnings(P-E) ratio
Definition
measures the ratio of the market price of each share of common stock to the earnings per share; computed by dividing the market price of the stock by earnings per share
Term
profit margin
Definition
measures the percentage of each dollar of sales that results in net income; computed by dividing net income by net sales
Term
profitability ratios
Definition
measures of the income or operating success of an enterprise for a given period of time
Term
pro forma income
Definition
a measure of income that usually excludes items that a company thinks are unusual or nonrecurring
Term
quality of earnings
Definition
indicates the level of full and transparent information provided to users of the financial statements
Term
ratio
Definition
an expression of the mathematical relationship between one quantity and another. the relationship may be expressed either as a percentage, a rate, or a simple proportion
Term
ratio analysis
Definition
a technique for evaluating financial statements that expresses the relationship between selected financial statement data
Term
receivables turnover
Definition
a measure of the liquidity of receivables; computed by dividing net credit sales by average net receivables
Term
return on assets
Definition
an overall measure of profitability; computed by dividing net income by average assets
Term
return on common stockholders' equity
Definition
measures the dollars of net income earned for each dollar invested by the owners; computed by dividing net income minus preferred dividends (if any) by average common stockholders' equity
Term
solvency ratios
Definition
measures the ability of the enterprise to survive over a long period of time
Term
times interest earned
Definition
measures of a company's ability to meet interest payments as they come due; computed by dividing income before interest expense and income taxes by interest expense
Term
trading on the equity
Definition
borrowing money at a lower rate of interest than can be earned by using the borrowed money
Term
vertical analysis
Definition
a technique for evaluating financial statement data than expresses each item within a financial statement as a percent of a base amount
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