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FNC1/ FNT1
capital budget/financial accounting
| Question | Answer |
|---|---|
| cash equivelents | highly liquid shot term investment that can be readily turned into cash |
| cash flows | cash receipts and payments |
| direct method | format of the operating activities statement of cash flow; it list major categories of operationg cash receipts and payments |
| financing activities | activities obtained to sustain cash when needed |
| free cash flow | the amount of cash left available after paying for planned investments in plant, equipment, & other long term assets |
| indirect method | format of the operating activities section of the stamnt of cash flows; starts with net income and reconciles to net cash provided by operating activities |
| investment activitites | activities that increase long or short term investments |
| operating activities | activities that create revenue or expense |
| horizontal anaylsis | this year- previous year = () divided by previous year |
| trend % | any year divided by base year x 100 |
| vertical analysis | each item divided by revenue (net sales) times 100 |
| common size stmnt | only reports percentages |
| current ratio | current assets / current liabilities |
| acid test (quick ratio) | shows how fast you can pay off your debts if they are due immediately |
| acid test formula | cash + short term investments + net current receivables / current liabilities |
| inventory turnover formula | COGS / average inventory |
| inventory turnover | measures the number of times a company sells its average inventory level in a year |
| Accts Rcvbl turnover | measures the ability to collect cash from credit customers |
| Acct rcvble turnover formula | net credit sales / average net accts rcbls |
| debt ratio | measures the amount of assets financed by debt |
| debt ratio formula | total liabilities / total assets |
| Rate of return formula | net income / net sales |
| rate of return | show the % each sales dollar earned as net income |
| EPS of common stock | issued stock - treasury stock |
| P/E ratio | market price per share of common stock / EPS |
| debenture bonds | bonds backed on good faith of the borrower |
| serial bonds | matures in installments at regular intervals |
| market interest rate | interest rate that investors demand in order to loan their money |
| target costs | allowable cost to produce product |
| opportunity costs | the lost benefit for not choosing a particular action |
| sunk costs | a past cost that cant be changed regardless of future action |
Created by:
nashanta
Popular Accounting sets