Financial Ratios and Analysis: Terms and Definitions, Quizzes of Computer Aided Design (CAD)

Download Financial Ratios and Analysis: Terms and Definitions and more Quizzes Computer Aided Design (CAD) in PDF only on Docsity! TERM 1 Acid-est ratio DEFINITION 1 cash, current investments, and accounts receivable divided by current liabilities; measures the availability of liquid current assets to pay current liabilities TERM 2 Aggressive accounting practices DEFINITION 2 practices that result in reporting higher income, higher assets, and lower liabilities TERM 3 Asset turnover DEFINITION 3 net sales divided by average total assets, which measures the sales per dollar assets invested TERM 4 Average collection period DEFINITION 4 Approximate number of days the average accounts receivable balance is outstanding. It equals 365 divided by the receivables turnover ratio. TERM 5 Average days in inventory DEFINITION 5 Approximate number of days the average inventory is held. It equals 365 days divided by the inventory turnover ratio TERM 6 Conservative accounting practices DEFINITION 6 practices that result in reporting lower income, lower assets, and high liabilities TERM 7 Current ratio DEFINITION 7 Current assets divided by current liabilities; measures the availability of current assets to pay current liabilities TERM 8 Debt to equity ratio DEFINITION 8 Total liabilities divided by stockholders' equity; measure a company's solvency risk TERM 9 Discontinued operation DEFINITION 9 the sale or disposal of a significatnt component of a company's operations TERM 10 Extraordinary item DEFINITION 10 An event that is 1. Unusual in nature and 2. Infrequent in occurrence TERM 21 return on assets DEFINITION 21 net income divided by average total assets; measures the amount of net income generated for each dollar invested in assets TERM 22 return on equity DEFINITION 22 net income divided by average stockholders' equity; measures the income generated per dollar of equity TERM 23 Solvency DEFINITION 23 Refers to a company's ability to pay its long-term liabilities TERM 24 times interest earned ratio DEFINITION 24 ratio that compares interest expense with income available to pay those TERM 25 value stocks DEFINITION 25 have lower share prices in relationship to their fundamental ratios and therefore trade at lower PE ratios TERM 26 vertical analysis DEFINITION 26 Expresses each item in a financial statement as a percentage of the same base amount