Financial Analysis Terms: Horizontal & Vertical Analysis, Profitability, Liquidity, Quizzes of Financial Accounting

Download Financial Analysis Terms: Horizontal & Vertical Analysis, Profitability, Liquidity and more Quizzes Financial Accounting in PDF only on Docsity! TERM 1 horizontal trend analysis DEFINITION 1 comparing results across time, often expressing changes in account balances as a percentage of prior year balances, sometimes called time-series analysis TERM 2 vertical analysis DEFINITION 2 expressing each financial statement amount as a percentage of another amount of the same financial statement, sometimes called common size analysis TERM 3 profitability DEFINITION 3 extent to which a company generates income TERM 4 liquidity DEFINITION 4 extent to which a company is able to pay its currently maturing obligations TERM 5 solvency DEFINITION 5 ability to survive long enough to repay lenders when debt matures TERM 6 net profit margin DEFINITION 6 profitability ratio, represents percentage of sales revenue that makes it into net income after deducting expensesnet income / net sales revenue x 100 TERM 7 gross profit percentage DEFINITION 7 profitability ratio, indicates how much profit was made on each dollar of sales after deducting costs of goods sold(net sales - costs of goods sold) / net sales x 100 TERM 8 asset turnover DEFINITION 8 profitability ratio, indicates amount of sales revenue generated on each dollar invested in assetsnet sales revenue / average total assets TERM 9 fixed asset turnover DEFINITION 9 profitability ratio, indicates how much revenue the company generates in sales for each dollar invested in fixed assets, such as store buildings and property they sit onnet sales revenue / average net fixed assets TERM 10 return of equity ROE DEFINITION 10 profitability ratio, compares the amount of net income to average stockholders' equity(net income / average stockholders' equity) x 100