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Accounting Study
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9
Accounting
Undergraduate 2
03/18/2017
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Term
The interest coverage ratio (ICR) is a measure of a company's ability to meet its interest payments. Interest coverage ratio is equal to earnings before interest and taxes (EBIT) for a time period, often one year, divided by interest expenses for the same time period.
 Definition
Interest Coverage Ratio
Term
In the liquidation of a partnership, any gain or loss on the realization of noncash assets should be allocated

 
 
 Definition
to the partners on the basis of their income ratios
Term
SERIAL BONDS
 Definition
a bond issue that is structured so that a portion of the outstanding bonds mature at regular intervals until all of the bonds have matured. ... The entire bond issue is sold to the public on the same date, and the maturity dates are stated in the offering documents.  They mature on different dates.
Term

Advantages of issuing bonds instead of stock?

 Definition
There are several advantages of issuing bonds or other debt instead of stock when acquiring assets. One advantage is that the interest on bonds and other debt is deductible on the corporation's income tax return. Dividends on a stock are not deductible on the income tax return.
A second advantage of financing assets with bonds instead of stock is that the ownership interest in the corporation will not be diluted by adding more owners. Bondholders and other lenders are not owners of the assets or of the corporation. Therefore, all of the gain in the value of the assets belongs to the stockholders. The bondholders will receive only the agreed upon interest. This is related to the concept of leverage or trading on equity. By issuing debt, the corporation gets to control a large asset by using other people's money instead of its own. If the asset ends up being very profitable, all of its earnings minus the interest, will enhance the owners' financial position.
Term
Disadvantage of Corporate form of business
 Definition
1. Setting up and filing state and federal reports is complex
-Corporate charter is filed with the state providing information about the company and directors
-Bylaws are for internal management and procedures
2. Earnings are subject to double taxation
Term
useful information, including details about a company's financial history, industry data, and credit ratings is available from
 Definition
SEC
Term
CASH EQUIVALENTS DO NOT INCLUDE
 Definition
marketable securities
Term

Which of the following ratios uses the market price of a company's stock in the denominator?

  a.

Dividend yield
  b.

Price/Earnings.
  c.

All of these choices.
  d.

Cash flow yield
Definition
A
Term
the calculation of free cash flow contains a deduction for
 Definition
Free cash flow = cash flow from operating activities - net capital expenditures (total capital expenditure - after-tax proceeds from sale of assets)

Read more: Free Cash Flow - CFA Level 1 | Investopedia http://www.investopedia.com/exam-guide/cfa-level-1/financial-statements/free-cash-flow.asp#ixzz4bjVZmaim 
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