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Chapter 17
| Term | Definition |
|---|---|
| Profitability ratio | The ratio that measures the ability of a business to generate income |
| Benchmark | A standard used to compare financial performance |
| Comparative financial statements | Financial statements that provide information for multiple fiscal periods |
| Trend analysis | An analysis of changes over time |
| Profit margin | Net income after federal income tax as a percent of net sales |
| Gross margin | Gross profit as a percent of net sales |
| Operating margin | Income from operations as a percent of net sales |
| Operating expenses ratio | Total operating expenses as a percent of net sales |
| Solvency ratio | A ratio that measures the ability of a business to pay its long term liabilities |
| Debt ratio | Total liabilities divided by total assets |
| Horizontal analysis | A comparison of one item on a financial statement with the same item on a previous period's financial statement |
| Earnings per share | Net income after federal income tax divided by the number of understanding shares of stock |
| Market ratio | A ratio that measures a corporations financial performance in relation to the market value of its stock |
| Dividend yield | The relationship between dividends per share and market price per share |
| Price-earnings ratio | The relationship between the market value per share and earnings per share of a stock |
| Liquidity ratio | A ratio that measures the ability of a business to pay its current financial obligations |
| Working capital | The amount of current assets less current liabilities |
| Current ratio | A ratio that measures the relationship of current assets to current liabilities |
| Quick assets | Cash and other current assets that can be quickly converted into cash |
| Quick ratio | A ratio that measures the relationship of quick assets to current liabilities |
Created by:
andrew.v
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