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Balance Sheet?
- Financial statement showing a firm's accounting value on a particular date.
- Shows assets, liabilities, and difference which is equity.
- Assets = Liabilities + Owner's Equity.
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Fixed Assets?
- One that has a relatively long life.
- Tangible or Intangible.
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Current Assets?
- Assets that last less than one year.
- Cash.
- Accounts recievable.
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Current Liabilities?
- debts that are to be paid off within the year.
- Accounts payable.
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Long Term Liability?
- Debt to be paid after a current year, longer loan time.
- Bonds.
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Owner's Equity?
If business were liquidated, residual value to shareholders.
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Net Working Capital?
Current assets less current liabilities.
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Liquidity?
The speed and ease with which an asset can be converted into cash without a significant loss in value.
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Financial Leverage?
- Increases potential reward to shareholders, but also increases potential financial distress and business failure.
- Debt as a portion of asset.
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Generally Accepted Accounting Principles?
The common set of standards and procedures by which audited financial statements are prepared.
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Book Value?
A different value requirining a different balance sheet than market value.
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Income Statement?
- Measures performance over some period of time, usually a quarter of a year.
- Revenues - Expenses = Income
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Earnings Per Share?
Net Income / Total Shares Outstanding
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Dividends Per Share?
Total Dividends / Total Shares Outstanding
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Noncash Items?
Expenses chanrged against revenues that do not directly affect cash flow, such as depreciation.
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Average Tax Rate?
Total Taxes Paid / Taxable Income
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Marginal Tax Rate?
Amount of tax payable on the next dollar earned.
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Calculating Taxes?
(Rate One x 50,000) + (Rate Two x 25,000) + (Rate Three x 25,000) Until Amount is Reached.
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Cash Flow from Assets?
- The total Cash Flow to creditors an cash flow to stockholders, consisting of the following:
- Operating Cash Flow - Capital Spending - Change in Net Working Capital
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Operating Cash Flow?
- Cash generated from a firm's normal business activities.
- Earnings (before interest and taxes) + Depreciation - Taxes
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Net Capital Spending?
Ending Net Fixed Assets - Beginning Net Fixed Assets + Depreciation
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Change in Net Working Capital?
Ending NWC - Beginning NWC
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Cash Flow to Creditors?
Dividends paid out by a firm less net new equity raised.
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Cash Flow to Stockholders?
Dividends Paid - Net New Equity Raised
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