Financial Management Terms and Concepts, Quizzes of Financial Accounting

Download Financial Management Terms and Concepts and more Quizzes Financial Accounting in PDF only on Docsity! TERM 1 Gross Profit Rate DEFINITION 1 Gross Profit / Net Sales TERM 2 Profit Margin DEFINITION 2 Net income / Net Sales TERM 3 Gross Profit DEFINITION 3 Net Sales - Cost of Goods Sold TERM 4 FIFO Inventory DEFINITION 4 LIFO Inventory + LIFO Reserve TERM 5 Accounts Receivable Turnover DEFINITION 5 net credit sales (net sales - cash sales) / average net accounts receivable during the yearTHe faster the turnover, the greater the reliability of the current ratio for assessing liquidity TERM 6 Average Accounts Recievable DEFINITION 6 Beginning AR + Ending AR / 2 TERM 7 Average Collection Period DEFINITION 7 measures the average amount of time that a receivable is outstanding365 / accounts receivable turnover TERM 8 captive finance companies DEFINITION 8 companies created by sellers to finance the activities of their buyersencourage the sale of the companys products by assuring finacning TERM 9 3 Reasons for Sale of Recievables DEFINITION 9 1 The Size2 may sell recievables becasue they may be the only reasonable source of cash3 Billing and collection are often time consuming and costly TERM 10 factor DEFINITION 10 a finance company or bank that buys recievables from businesses for a fee and then collects the payments from the customerscommisions range from 1 to 3 percent