Business finance vocabulary

concerns revenues and expenditures that are cash only.Do not consider the credit- issued or taken, also disregard depreciation

Fixed assets- long term assets, usually used for more than one year

Net profits, Retained earnings

How should the firm finance or pay for their assets? some options- retained earnings, issue or sell common stock, borrow from commercial bank

What productive assets should the firm buy or invest in?

How should day to day financial matters be managed?

Relationships between business owners (principals) and decision-making specialists (agents) hired to perform a service; to manage a principal's operations and maximize return on investment

the costs of the conflict of interest between stockholders and management

Return On Assets

Return On Equity 

Application of analytical tools to general-purpose financial statements and related data for making business decisions.

performance measures that are used by similar types of businesses to monitor key operations

1 of 5 categories of Financial Analysisfinancial ratios that measures the organization's ability to meet its current debt obligations with its current assets.

1 of 5 categories of Financial Analysisprovide insight into how EFFECTIVELY firms measure assets to generate revenue

1 of 5 categories of Financial Analysis(Total Debt) / (Total Assets)

1 of 5 categories of Financial Analysis,a financial ratio that describes the firm's profits in terms of a source of profits (for example, sales or total assets).

1 of 5 categories of Financial Analysis- Price-Earning Ratio- Price-Sales Ratio- Market-to-Book Ratio

Subset of Liquidity RatioCurrent Assets/Current Liabilities

Subset of Liquidity Ratios-Current Assets - Inventory / Current LiabilitiesAlso called "Acid Test"

Subset of Efficiency Ratios-A ratio that measures the liquidity of inventory by measuring the number of times average inventory sold during the period; computed by dividing cost of goods sold by the average inventory during the period.

Subset of Efficiency Ratios-365 / Inventory Turnover Ratio

Subset of Efficiency Ratios-Net Credit Sales / Average Accounts Receivable, the number of times the average amount of accounts receivable is collected during a specified period

Subset of Efficiency Ratios-Sales/Total AssetsHigher turnover= more efficiency

Subset of Efficiency Ratios-Sales/Net Fixed Assetsmeasures a company's ability to generate net sales from fixed asset investments (specifically property, plant and equipment),

The phenomenon of prices increasing with the passage of time.

Markets in which national, state, and local governments raise money for highways, education, welfare, and other public activities.

Large investors such as pension funds or mutual funds.

A financial statement that measures the profitability of the firm over a time period. All expenses are subtracted from sales to arrive at net income.

Process that can take many forms in a corporation, such as changes in the capital structure (liability and equity on the balance sheet). It can also result in the selling of low-profit-margin divisions with proceeds reinvested in better investments

Cash flow from operating activities, minus expenditures required to maintain the productive capacity of the firm, minus dividend payouts.

The market for the raising of new funds as opposed to the trading of securities already in existence.

The multiplier applied to earnings per share to determine current value. [This] ratio is influenced by the earnings and sales growth of the firm, the risk or volatility of its performance, the debt-equity structure, and other factors.

A financial statement that indicates what assets the firm owns and how those assets are financed in the form of liabilities or ownership interest.

The market for securities that have already been issued. It is a market in which investors trade back and forth with each other.

This occurs when someone has information that is not available to the public and then uses this information to profit from trading in a company's common stock.

The relative convertability of short-term assets to cash. Thus, marketable securities are highly liquid assets, while inventory may not be.

The allocation of the initial cost of an asset over its useful life. The annual expense of plant and equipment is matched against the revenues that are being produced.

The earnings available to common stockholders divided by the number of common stock shares oustanding.

If you take all the assets of the firm and subtract its liabilities and preferred stock, you arrive at [this].