# Shared Flashcard Set

## Details

Accounting: What the Numbers Mean- Chapter 3 Vocabulary
Fundamental Interpretations Made From Financial Statement Data
18
Accounting
01/27/2012

Term
 acid-test ratio
Definition
 The ratio of the sum of cash (including temporary cash investments) and accounts receivable to current liabilities. A primary measure of a firm's liquidity.
Term
 asset turnover
Definition
 The quotient of sales divided by average assets for the year or other fiscal period.
Term
 COD
Definition
 Cash on delivery, or collect on delivery.
Term
 credit risk
Definition
 The risk that an entity to which credit has been extended will not pay the amount due on the date set for payment.
Term
 DuPont model
Definition
 An expansion Of the return on investment calculation To margin x turnover.
Term
 interest
Definition
 The income or expense from investing or borrowing money.
Term
 interest rate
Definition
 The percentage amount used, together with principal and time, to calculate interest.
Term
 liquidity
Definition
 Refers to a firm's ability to meet its current financial obligations.
Term
 margin
Definition
 The percentage of net income to net sales. Sometimes margin is calculated using operating income or other intermediate subtotals of the income statement. The term also can refer to the amount of gross profit, operating income, or net income.
Term
 principal
Definition
 The amount of money invested or borrowed.
Term
 rate of return
Definition
 A percentage calculated by dividing the amount of return on an investment for a period of time by the average amount invested for the period. A primary measure of profitability.
Term
 return on equity (ROE)
Definition
 The percentage of net income divided by average owners' equity for the fiscal period in which the net income was earned; frequently referred to as ROE. A primary measure of a firm's profitability.
Term
 return on investment (ROI)
Definition
 The rate of return on an investment; frequently referred to as ROI. Sometimes referred to as return on assets. A primary measure of a firm's profitability.
Term
 risk
Definition
 A concept that describes the range of possible outcomes from an action. The greater the range of possible outcomes, the greater the risk.
Term
 semilogarithmic graph
Definition
 A graph format in which the vertical axis is a logarithmic scale.
Term
 trend analysis
Definition
 Evaluation of the trend of data over time.
Term
 turnover
Definition
 The quotient of sales divided by the average assets for the year or some other fiscal period. A descriptor, such as total asset, inventory, or plant and equipment, usually precedes the turnover term. A measure of the efficiency with which assets are used to generate sales.
Term
 working capital
Definition
 The difference between current assets and current liabilities. A measure of a firm's liquidity.
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