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Accounting
Ch. 13
| Term | Definition |
|---|---|
| Working Capital | Measures the company’s ability to repay current liabilities using only current assets |
| Current ratio | Test of short-term debt-paying ability |
| Acid-test ratio | Test of short-term debt-paying ability without having to rely on inventory |
| Accounts receivable turnover | Measures how many times a company’s accounts receivable have been turned into cash during the year |
| Average collection period | Measures the average number of days taken to collect an account receivable |
| Inventory turnover | Measures how many times a company’s inventory has been sold during the year |
| Average sale period | Measures the average number of days taken to sell the inventory one time |
| Operating cycle | Measures the elapsed time from when inventory is received from suppliers to when cash is received from customers |
| Total asset turnover | Measures how efficiently assets are being used to generate sales |
| Times interest earned | Measures the company’s ability to make interest payments |
| Debt-to-equity ratio | Measures the amount of assets being provided by creditors for each dollar of assets being provided by the stockholders |
| Equity multiplier | Measures the portion of a company’s assets funded by equity |
| Gross margin percentage | Measures profitability before selling and administrative expenses |
| Net profit margin percentage | A broad measure of profitability |
| Return on total assets | Measures how well assets have been employed by management |
| Return on equity | When compared to the return on total assets, measures the extent to which financial leverage is working for or against common stockholders |
| Earnings per share | Affects the market price per share, as reflected in the price-earnings ratio |
| Price-earnings ratio | An index of whether a stock is relatively cheap or relatively expensive in relation to current earnings |
| Dividend payout ratio | An index showing whether a company pays out most of its earnings in dividends or reinvests the earnings internally |
| Dividend yield ratio | Shows the return in terms of cash dividends being provided by a stock |
| Book value per share | Measures the amount that would be distributed to common stockholders if all assets were sold at their balance sheet carrying amounts and if all creditors were paid off |
Created by:
mpiontek
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