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Chapter 17

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