Term
| horizontal or trend analysis |
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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.
formula for changes since base period:
(current year amount-base year amount) / (base year amount)
formula for relationship to base year.
(current year amount) / (base year amount) |
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Term
| vertical or common-size analysis |
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Definition
| a technique for evaluating financial statement data that expresses each item within a financial statement as a percent of a base amount. |
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Term
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Definition
| measures of the short-term ability of the enterprise to pay its maturing obligations and to meet unexpected needs for cash. |
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Term
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Definition
| measures of the income or operating success of an enterprise for a given period of time. |
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Term
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Definition
| measures the ability of the enterprise to survive over a long period of time. |
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Term
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Definition
(liquidity ratio) a measure used to evaluate a company's liquidity and short-term debt-paying ability; computed by dividing current assets by current liabilities.
formula:
(current assets) / (current liabilities) |
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Term
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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.
formula:
[cash + short-term investments + receivables (net)] / (current liabilities) |
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Term
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Definition
(liquidity ratio) a measure of the liquidity of receivables; computed by dividing net credit sales by average net receivables.
formula:
(net credit sales) / (average net receivables) |
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Term
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Definition
(liquidity ratio) a measure of the liquidity of inventory; computed by dividing cost of goods sold by average inventory.
formula:
(cost of goods sold) / (average inventory) |
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Term
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Definition
(profitability ratio) measures the percentage of each dollar of sales that results in net income; computed by dividing net income by net sales.
formula:
(net income) / (net sales) |
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Term
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Definition
(profitability ratio) a measure of how efficiently a company uses its assets to generate sales: computed by dividing net sales by average assets.
formula:
(net sales) / (average assets) |
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Term
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Definition
(profitability ratio) an overall measure of profitability; computed by dividing net income by average assets.
formula:
(net income) / (average assets) |
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Term
| return on common stockholders' equity |
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Definition
(profitability ratio) measures the dollars of net income earned for each dollar invested by the owners; computed by dividing net income by average common stockholders' equity.
formula:
(net income) / (average common stockholders' equity) |
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Term
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Definition
(profitability ratio) the net income earned on each share of common stock; computed by dividing net income by the number of weighted average common shares outstanding.
formula:
(net income) / (weighted average common shares outstanding) |
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Term
| price-earnings (P-E) ratio |
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Definition
(profitability ratio) 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.
formula:
(market price per share of stock) / (earnings per share) |
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Term
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Definition
(profitability ratio) 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.
formula:
(cash dividends) / (net income) |
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Term
| debt to total assets ratio |
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Definition
(solvency ratio) measures the percentage of total assets provided by creditors; computed by dividing total debt by total assets.
formula:
(total debt) / (total assets) |
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Term
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Definition
(solvency ratio) measures 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.
formula:
(income before income taxes and interest expense) / (interest expense) |
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