Profitability Ratios Other Terms Review Potpourri $100100$100100$100100 $200200$200200$200200...
28
Profitabi lity Ratios Other Terms Review Potpourr i $100 $100 $100 $200 $200 $200 $300 $300 $300 $400 $400 $400 $500 Solvency Ratios $400 $100 $200 $300 $500 Liquidit y Ratios $100 $200 $300 $400 $500 $500 $500
-
Upload
hugh-casey -
Category
Documents
-
view
217 -
download
0
Transcript of Profitability Ratios Other Terms Review Potpourri $100100$100100$100100 $200200$200200$200200...
Profitability Ratios
Other Terms
Review Potpourri
$100 $100 $100
$200 $200 $200
$300 $300 $300
$400 $400 $400
$500
Solvency Ratios
$400
$100
$200
$300
$500
Liquidity Ratios
$100
$200
$300
$400
$500 $500 $500
Profitability Ratios - $100
Indicates the percentage of sales that exceed the cost of goods sold.
What is the Gross Profit Percentage?
Back to Board
Profitability Ratios - $200
Indicates how much the company generates in sales for each dollar invested in fixed assets.
What is the Fixed Asset Turnover ratio?
Back to Board
Profitability Ratios - $300
Indicates the percentage of sales revenue that ultimately makes it into net income.
What is the Net Profit Margin ratio?
Back to Board
Profitability Ratios - $400
Indicates the amount of sales generated for each dollar invested in assets.
What is the Asset Turnover ratio? (Different from Fixed Asset turnover ratio.)
Back to Board
Profitability Ratios - $500
Indicates the amount of earnings generated for each common share.
What is the Earnings per Share (EPS) ratio?
Back to Board
Liquidity Ratios - $100
The term that relates to a company’s ability to pay its currently maturing obligations.
What is Liquidity?
Back to Board
Liquidity Ratios - $200
Indicates how frequently inventory is bought and sold during the year.
What is the Inventory Turnover ratio?
Back to Board
Liquidity Ratios - $300
Compares current assets to current liabilities.
What is the Current ratio?
Back to Board
Liquidity Ratios - $400
Indicates how many times, on average, the process of selling on credit and collecting is repeated during the period.
What is the Receivables Turnover ratio?
Back to Board
Liquidity Ratios - $500
The process used to calculate the number of days it takes to sell inventory during a year.
What is “dividing 365 by the annual Inventory Turnover ratio”?
Back to Board
Solvency Ratios - $100
The term that refers to a company’s ability to survive long enough to repay lenders when debt matures.
What is Solvency?
Back to Board
Solvency Ratios - $200
Indicates the proportion of total assets that are financed by creditors.
What is the Debt-to-Assets ratio?
Back to Board
Solvency Ratios - $300
DAILY DOUBLE!!!
Solvency Ratios - $400
Compares cash flows from operations to cash paid for property and equipment.
What is the Capital Acquisitions ratio?
Back to Board
Solvency Ratios - $500
Is calculated using the formula Total Liabilities / Total Assets.
What is the Debt to Assets ratio?
Back to Board
Other Terms - $100
The assumption that indicates that the long life of a company can be reported in shorter time periods.
What is the Time Period Assumption?
Back to Board
Other Terms - $200
Recognizes that companies in certain industries must follow accounting rules peculiar to that industry.
What is the Industry Practices Constraint?
Back to Board
Other Terms - $300
States that businesses are assumed to continue to operate into the foreseeable future.
What is the Going-Concern (Continuity) Assumption?
Back to Board
Other Terms - $400
States that accounting rules should be followed to the extent that the benefits outweigh the costs of doing so.
What is the Cost-Benefit Constraint?
Back to Board
Other Terms - $500
The principle that financial reports should present all information that is needed to properly interpret the results of the company’s business activities.
What is the “full disclosure principle”?
Back to Board
Review Potpourri - $100
Back to Board
The section of the SCF under which an increase in long-term debt is reported.
What is Cash Flows from Financing?
Review Potpourri - $200
Back to Board
The inventory costing method that assigns the costs of the first goods purchased to the first goods sold.
What is FIFO (first-in, first-out)?
Review Potpourri - $300
Back to Board
The Cost of Goods Sold equation.
What is Beginning Inventory + Purchases – Ending Inventory = COGS?
Review Potpourri - $400
Back to Board
The method of estimating bad debt expense that is based on the age of customer account balances.
What is the Aging method?
Review Potpourri - $500
Back to Board
The Fundamental Accounting Equation.
What is Assets = Liabilities + Shareholders’ Equity?
Daily Double Specify Your Wager!
Solvency Ratios ---
Indicates how many times interest expense is covered by income (before the costs of financing and taxes).
Back to Board
What is the Times Interest Earned ratio?
