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Cards from 8/25 Corporate Finance
Chapters 1 & 2
41
Business
Graduate
08/29/2010

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Cards

Term
What part of the accounting equation represents nonowner financing?
Definition
Liabilities
Term
What part of the accounting equation does represents owner financing?
Definition
Equity
Term
What part of the accounting equation represents financing activities?
Definition
Liabilities and Equity combined
Term
What part of the accounting equation represents investing activities?
Definition
Assets
Term
Why do technology companies tend to be equity (owner financing) heavy compared to liabilities?
Definition
Technology companies are inherently risky due to the speed of innovation and, therefore, can't sustain high levels of liabilities.
Term
Which financial statement represents a company's financial position at a point in time?
Definition
Balance Sheet
Term
Which financial statement represents a company's performance over a period of time?
Definition
Income Statement
Term
Which financial statement represents a company's change in cash balance over a period of time?
Definition
Statement of cash flows
Term
Which financial statement does the accounting equation apply to?
Definition
Balance Sheet
Term
Of assets, liabilities and equity in accounting equation does retained earnings show up?
Definition
Equity
Term
What is the portion of net income which is retained by a corporation rather than distributed to its owners?
Definition
Retained Earnings
Term
How do you compute return on assets?
Definition
Net income / average assets for period
Term
If a company has sales of 100,000 with a cost of goods of 60,000 what's the retained earnings?
Definition
40,000
Term
What part of the accounting equation does retained earning get applied to?
Definition
Equity
Term
Does the airing of prepaid advertising have any effect on retained earnings?
Definition
Yes, it reduces retained earnings
Term
What two parts of the accounting equation are impacted by paying an expenses?
Definition
Both assets and equity (retained earnings) are reduced
Term
How does accrued, unpaid liabilities (e.g. earned employee salary) impact the accounting equation?
Definition
It increases liabilities and decreases equity (retained earnings)
Term
Does the fluctuation in common stock price effect a company's balance sheet?
Definition
No
Term
Assume a company acquires another company. How is goodwill computed
Definition
Take purchase price and subtract estimated value of all assets.
Term
What do you call a contractual agreement a lender puts on a borrower?
Definition
Convenant
Term
What does GAAP stand for?
Definition
Generally Accepted Accounting Principles
Term
What does IFRS stand for?
Definition
International Financial Reporting Standards
Term
Which of the 10-K and 10-Q are filed annually? How often is the other filed?
Definition
10-K, 10-Q is filed quarterly except when 10-K is due.
Term
What does SG&A stand for?
Definition
Selling, General & Administrative expenses
Term
Give an example of SG&A
Definition
marketing, salaries, depreciation
Term
What does EPS stand for?
Definition
Earnings Per Share
Term
What are the two types of EPS?
Definition
Basic and Diluted
Term
What's the difference between diluted and basic EPS
Definition
Diluted EPS tries to account for future shares
Term
What is inventory turnover?
Definition
The number of times inventory is sold or used over a certain time period (e.g. year)
Term
What is Reg FD?
Definition
Regulation of Fair Disclosure. It mandated that all publicly traded companies must disclose material information to all investors at the same time (read: curbs selective disclosure)
Term
What does IASB stand for?
Definition
International Accounting Standards Board
Term
Which accounting standards does the IASB manage?
Definition
IFRS
Term
What does FASB stand for?
Definition
Financial Accounting Standards Board
Term
What accounting standard does the FASB manage?
Definition
GAAP
Term
What does ROA stand for?
Definition
Return on Assets
Term
Sales less cost of sales is what?
Definition
Gross Profits
Term
Can stock owners bankrupt a company?
Definition
No
Term
What's another name for stock buy-backs a company may make?
Definition
Treasury Stock
Term
How does treasury stock effect EPS
Definition
Increases EPS by reducing the number of available stocks while leaving earnings alone.
Term
What three basic types of activities are represented in a statement of cash flows?
Definition
Operating activities, investing activities and financing activities.
Term
How do you calculate inventory turnover?
Definition
Cost of goods sold / avg of assets over a period of time (typically 2yrs)
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