Term
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Definition
| a snapshot of the firm's information categorized in assets, liabilities and equity |
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Term
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Definition
| Assets = liabilities + share holder's equity |
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Term
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Definition
| current assets less current liabilities |
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Term
| Formula for SHAREHOLDERS' EQUITY |
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Definition
| Shareholders' equity = assets - liability |
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Term
| Generally Accepted Accounting Principles (GAAP) |
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Definition
| the common set of standards and procedures by which audited financial statements are prepared |
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Definition
| summarizes the firm's performance over a period of time |
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Term
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Definition
| revenues - expenses = income |
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Term
| What is another word for NET INCOME? |
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Definition
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Term
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Definition
| expenses charged against revenues that do not directly affect cash flow, such as depreciation |
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Term
| Formula for CASH FLOW FROM ASSETS |
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Definition
| Cash flow from assets = cash flow to creditors + cash flow to stockholders |
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Term
| What does CASH FLOW FROM ASSETS consist of? |
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Definition
| Operating cash flow, capital spending, and change in net working capital |
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Term
| Formula for CURRENT RATIO |
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Definition
| Current ratio = current assets/current liabilities |
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Term
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Definition
| Quick ratio = (Current assets - Inventory)/Current liabilities |
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Term
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Definition
| Cash ratio = Cash/Current Liabilities |
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Term
| Formula for TOTAL DEBT RATIO |
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Definition
| Total debt ratio = (total assets - total equity)/total assets |
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Term
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Definition
| Debt-equity ratio = Total debt/Total equity |
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Term
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Definition
| Equity Multiplier = Total assets/total equity |
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Term
| TIMES INTEREST EARNED RATIO |
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Definition
| Times interest earned ratio = EBIT/interest |
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Term
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Definition
| Cash coverage ratio = (EBIT + Depreciation)/Interest |
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Term
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Definition
| Inventory Turnover = Cost of goods sold/Inventory |
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Term
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Definition
| Days' sales in inventory = 365 days/Inventory turnover |
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Term
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Definition
| Receivables turnover = Sales/Accounts receivable |
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Term
| DAYS' SALES IN RECEIVABLES |
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Definition
| Days' sales in receivables = 365 days/Receivables turnovers |
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Term
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Definition
| Total Asset Turnover = Sales/Total Assets |
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Term
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Definition
| Profit Margin = Net income/Sales |
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Term
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Definition
| Return on assets = Net income/Total assets |
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Term
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Definition
| Return on equity = Net Income/ Total Equity |
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Term
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Definition
| EPS = Net income/shares outstanding |
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Term
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Definition
| PE Ratio = Price per share/EPS |
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Term
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Definition
| Price sales ratio = Price per share/ sales per share |
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Term
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Definition
| Market to book ratio = Market value per share/Book value per share |
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Term
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Definition
| ROE = Net income/Total equity |
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Term
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Definition
Internal growth rate = (ROA x b)/(1-ROA x b)
*"b" is the retention or plowback ratio |
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Term
| What are the three factors of ROE? |
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Definition
1. Profit margin
2. Total asset turnover
3. Equity multiplier
*you can multiply these together |
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Term
| What are the three main reasons for holding cash? |
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Definition
| Speculative motive, precautionary motive, transactional motive |
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Term
| Define FLOAT. What is the formula? |
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Definition
The difference between the book cash balance and the available balance.
Float = available balance - book balance |
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