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A host of vital questions on all aspects of your company's financial activities, giving both internal and external stakeholders a comprehensive snapshot.
They usually use financial statement analysis to analyze the efficiency of operations and make important business decisions.
If the inventory is liquid, the quick ratio is the preferred measure of overall liquidity.
Revenues are probably your business's main source of cash.
A legally binding agreement between two parties to buy or sell a specific quantity of shares of an individual stock or a narrow-based security index at a specified price, on a specified date in the future.
An income statement showing only component percentages is known as
Interested parties use ratio analysis to find information about the following: I. Profitability of the business firm/ II. The firm’s ability to meet its obligations III. Safety of the investment in the business IV. Effectiveness of management in running the firm
As asset turnover decreases, a company will generate more sales per asset owned, resulting in a higher overall return on equity.
The following are debt ratios except
The following are the qualitative factors for stock analysis, except
This refers to putting money to work to start or expand a project or to purchase an asset or interest where those funds are then put to work, with the goal to income and increased value over time.
It includes three sections: operating cash flow, investing cash flow, and financing cash flow.
The data that relates to the quality or character of something, such as how well a company is managed or whether a company has poor customer satisfaction ratings
First statement: Penny stocks do not pay dividends and are highly speculative Second statement: Corporations raise funds by selling preferred and common stock to individuals; and other investors who are owners or shareholders in the firm.
Amy Corporation’s stockholders’ equity at December 31, 2019, consisted of the following: Preferred stock, P 50 par value, 10% noncumulative; 100,000 shares issued and outstanding P 5,000,000 Common stock, P 10 par value, 800,000 shares Issued and outstanding 8,000,000 Retained earnings 3,000,000 The preferred stock has a liquidating value of P 55 per share. At December 31,2019 the book value per share of common stock is
First statement: It is preferable to use audited financial statements for ratio analysis.
Also known as Cost of Goods Sold, this represents all the expenses directly related to the making and storing of a company's goods, such as raw materials, warehousing, and direct labor costs.
The debt ratio of 35 percent indicates that the company has financed more than half of its assets with debt.
Predicting any company's future profits and future growth with accuracy is pretty easy.
This is what remains for reinvestment into your business and for distribution to owners in the form of dividends.
When investing in a stock, your goal should be to pay a price that's less than the value of the company's future profits.
How many types of stocks there are?
It involves methods of calculating and interpreting financial ratios to analyze and monitor the firm's performance.
This used valuation metrics and other information about a company's business in order to determine whether a stock is attractively priced.
The most commonly cited financial ratio that measures the firm's ability to measure its short-term obligations is
Which statement about blue chips stocks is correct?
Revenue per employee (_____________ ÷ average number of employees)
The class of stock which has a claim on assets before common stock is known as
This measures how efficiently you manage the credit you extend to customers.
This is commonly cited measure of the firm's success with respect to the earnings on sales.
This represents incurred expenses the company expects to pay within one year.
According to Dr. Dubos J. Masson, to effectively analyze the financial statements of a firm, it requires an understanding of three key areas, except
They are concerned with the company’s ability to pay interest and principal when due and are concerned with the company’s cash flow ability.
Technical analysis is based on the assumption that stock prices don't necessarily reflect the true intrinsic value of the underlying business.
This is an indirect analysis of a company's use of debt to finance its assets. This is also called equity multiplier.
The first section of the cash flow statement, which includes cash generated by and required for the daily operations of a business.
Below shows the current assets and current liabilities of Tala Company ASSETS LIABILITIES Current Assets Current Liabilities Cash P 2,550,000 Accounts payable P 9,500,000 Marketable securities 2,000,000 Short-term bank loan 11,375,000 Accounts receivable 16,675,000 Total current liabilities P 20,875,000 Inventories 26,470,000 Total current assets P 47,695,000 What is the company's quick ratio?
The very lowest priced stocks are known as
Amount calculated by subtracting cost of goods sold and operating expenses from revenue on the income statement.
First statement: Technical analysts believe that stock prices move in trends. Second statement: Fundamental analysts usually look at the supply and demand for a particular stock in the market and identify patterns.
Cash used for investing in long-term assets, such as equipment or equity securities, and cash received from the sale of such investments.
Cash received or paid from borrowing money or paying back investors, creditors, and shareholders.
For example, if a stock trades for $30.00 and the company's earnings were $2.00 per share over the past year, we'd say it traded for a P/E ratio of 15, or "______________."
When calculating revenue growth, don't include one-time revenues, which can distort the analysis.
The flip side of fixed assets, this represents money the company needs to pay back in one or more years.
For example, a stock with a P/E ratio of 20 and 10% expected earnings growth over the next five years would have a PEG ratio of __________.
The following common size income statement are available for A.M.Y Corporation for two years ended December 31, 2019, and 2018: 2019 2018 The trend percentages for sales are as follows: Sales 100% 100% 2017 130% Cost of sales 55 70 2016 100% Gross profit 45 30 Operating expenses 20 18 Net income 25% 12% What should be the trend percentage for gross profit on sales for 2019?
A report published yearly by all publicly-held companies that details the financial condition of the company and includes the balance sheet, income statement, cash flow statement, and other relevant information.
Lucena Corporation’s books disclosed the following information as of and for the year ended December 31, 2019: Net credit sales P 4,000,000 Net cash sales 1,000,000 Merchandise purchases 2,000,000 Inventory at beginning 1,200,000 Inventory at end 400,000 Accounts receivable at beginning 600,000 Accounts receivable at end 1,400,000 Net income 200,000 Marble’s percent of net income on sales is
If the firm extended 45-day credit term and their average collection period is 40 days, may indicate a poorly managed credit collection department.
Book value refers to:
A company's book value is the _____________ of the value of its assets.
One important distinction is that fundamental analysis is typically intended to find long-term investment opportunities, while technical analysis is often geared toward profiting from short-term _____.
Lucena Corporation’s books disclosed the following information as of and for the year ended December 31, 2019: Net credit sales P 4,000,000 Net cash sales 1,000,000 Merchandise purchases 2,000,000 Inventory at beginning 1,200,000 Inventory at end 400,000 Accounts receivable at beginning 600,000 Accounts receivable at end 1,400,000 Net income 200,000 Marble’s percent of net income on sales is
This refers to putting money to work to start or expand a project or to purchase an asset or interest where those funds are then put to work, with the goal to income and increased value over time.
The section on a company's website under which you can find the company's financial statements.
A grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds is called
The 10 percent return on assets indicates that that company earned 10 centavos on each peso of asset invested.
These are assets held by an entity for accretion of wealth through distribution such as interest, royalties, dividends and rentals, for capital appreciation of for other benefits to the investing entity such as those obtained through trading relationships.
There's no set rule in regards to how much debt is too much, but if a company's debt to __________ is significantly higher than its peers, it could be a sign of a higher-risk investment.
Which of the following does not belong to the list?
Southern Division reported the following results for 2019 Annual sales P 5,000,000 Net earnings 800,000 Investment 2,500,000 What is the Southern Division’s return on sales
In 2018, ASB Corporation’s net income was P 1,600,000 and in 2019 it was P 400,000. What percentage increase in net income must ASB achieve in 2019 to offset 2018 decline in net income?
The place where buyers and sellers meet to decide on the price to buy or sell securities,usually with the assistance of a broker is called
First statement: Understanding fundamental analysis is necessary to determine whether a stock is valued correctly in the market. Second statement: Analysts typically look at macro and micro factors to identify stocks that are trading at higher and lower prices.
_______________________ (revenues – cost of goods sold – operating expenses) ÷ revenues
This measures how efficiently you manage inventory.
This measures the efficiency with which the firm uses all of its assets to generate sales
A financial institution (FI) is a company engaged in the business of dealing with financial and monetary transactions such as deposits, loans, investments, and currency exchange.
First statement: Common stockholders can attend at annual general meeting to cast vote or use a proxy. Second statement: Noncumulative preferred stock is preferred stock for which the right to receive a basic dividend accumulates if the dividend is not paid.
What is the Stock Market?
The breadth of the market shows:
They use financial statement analysis to ensure the compliance of publicly traded companies to various rules and regulations.
To compute for debt ratio, you have to divide current assets by current liabilities.
A method of arriving at net operating cash flow by adjusting the net income on the income statement for non-cash revenues and expenses.
Market ratios capture both risk and return.
Revenue growth (___________________ - revenue last period) ÷ revenue last period
As profit margin decreases, every sale will bring more money to a company’s bottom line, resulting in a higher overall return on equity.
___________________ equips with the potential of a superior level of earnings in the future. The earnings are used for reinvestment in order to maintain the growing trend of these stocks. Therefore, growth stocks do not pay dividends.
They are the users of funds I. Lenders II. Borrowers III. Savers IV. Investors V. Intermediary
In 2018, ASB Corporation’s net income was P 1,600,000 and in 2019 it was P 400,000. What percentage increase in net income must ASB achieve in 2020 to offset 2019 decline in net income?
Selected information from the operating records of Kaya Company is as follows: Net sales P 1,800,000 Cost of goods sold for 2019 1,200,000 Inventory at 12/31/2018 360,000 Inventory at 12/31/2019 312,000 Kay’s inventory turnover for 2019 is
Other terms for government bonds are enumerated below, except
First statement: Penny stocks do not pay dividends and are highly speculative Second statement: Corporations raise funds by selling preferred and common stock to individuals; and other investors who are owners or shareholders in the firm.
This method is used when preparing the income statement and balance sheet.
A financial statement that specifies the financial results of a business over a defined period of time and lists the revenue, expenses, and net income of the business.
Assessing asset quality involves rating investment risk factors that the company may face and comparing them with the company's capital earnings.
Decrease in financial leverage will lead to an increase in return on equity.
By splitting ROE into three parts, companies can more easily understand changes in their returns on equity over time.
A higher number means your company is managing credit well; a lower number is a warning sign you should improve how you _____ from customers.
Return on assets often called
Examiners assess institutions' capital adequacy through
First statement: Liquidity, activity and debt ratios primarily measure return.
First statement: The statements for two or more periods are used in horizontal analysis. Second statement: In vertical analysis all the items in a particular statement are represented as a percentage of a particular item.
First statement: A lower times interest earned ratio indicates greater capacity to meet scheduled payments.
The technique of securing funds for investment at a fixed rate of return to fund suppliers to enhance the well being of common stockholders.
As profit margin increases, every sale will bring more money to a company’s bottom line, resulting in a higher overall return on equity.
First statement: Fixed annuities are regulated by state insurance commissioners. Second statement: In variable annuity, the insurance company allows to direct annuity payments to different investment options, usually mutual funds.
Liquidity, activity and debt ratios primarily measure return.
The value of everything a company uses to conduct business, such as cash, equipment, land, inventories, office equipment, and money owed to the company by customers and clients.
They are the suppliers of funds I. Lenders II. Borrowers III. Savers IV. Investors V. Intermediary
Stocks that have earnings growing at a faster rate than the market average are called
It refers to the practice of financing assets with borrowed capital.
Revenue concentration (revenue from client ÷ ____________________)
Represents all interest paid by the company for loans it incurred and is part of the expenses deducted from revenues in the process of arriving at net income on the income statement.
No client should represent more than 10 percent of your total revenues.
Selected information from the operating records of Kaya Company is as follows: Net sales P 1,800,000 Cost of goods sold for 2019 1,200,000 Inventory at 12/31/2018 360,000 Inventory at 12/31/2019 312,000 Kay’s inventory turnover for 2019 is
The main reasons to use common-size analysis are enumerated below, except I. to evaluate information from one period to the next within a company II. to evaluate a company relative to its competitors. III. to evaluate the trend situation
All costs incurred in operating the business that are not directly related to the production and storage of a company's goods.
Below shows the current assets and current liabilites of Tala Company ASSETS LIABILITIES Current Assets Current Liabilities Cash P 2,550,000 Accounts payable P 9,500,000 Marketable securities 2,000,000 Short-term bank loan 11,375,000 Accounts receivable 16,675,000 Total current liabilities P20,875,000 Inventories 26,470,000 Total current assets P 47,695,000 Tala’s current ratio is
The ratio that measures the proportion of total assets financed by the creditors
First Statement: Investing involves the purchase of assets with the intent of holding them for the long term. Second Statement: Speculation involves attempting to capitalize on market inefficiencies for short-term profit.
It is recorded as part of current assets on the balance sheet.
If a company has P 10 million net income and 4 million outstanding shares, the earnings per share would be
Fundamental analysis generally assumes that a stock's price reflects all available information and that prices generally move according to trends.
Money invested in a company by its owners/shareholders.
First statement: As profit margin decreases, every sale will bring more money to a company’s bottom line, resulting in a higher overall return on equity.
One of the most commonly used profitability metrics, return on equity or ___________ is calculated by dividing a company's net income by its shareholders equity (assets minus liabilities).
A method used to account for the diminishing value of an asset over the time it is used and to match profit with the expenses it took to generate that profit.
This represents the return investors are generating from your business.
The most informative approach to ratio analysis combines cross-sectional and time series analyses.
Value stocks are usually traded below the market price. They are considered having the low-term potential growth because of long-term growth of company associated with the stocks.
An ask and bid is the ______ price and _________ price.
An item included on the income statement of production companies, calculated by deducting cost of goods sold from revenues/sales generated from those goods.
Southern Division reported the following results for 2019 Annual sales P 5,000,000 Net earnings 800,000 Investment 2,500,000 What is Southern Division’s return on investment?
First statement: Investing in government bonds means you are lending money to the government. Second statement: Investing in government bonds means that you are borrowing money from the government
This commonly measures the activity, or liquidity of the firm's inventory
A financial statement that gives a snapshot of a company's financial situation at a particular point in time and lists its different assets, liabilities, and owners' equity.
The ____________ takes a stock's P/E ratio and divides by the expected annualized earnings growth rate over the next few years.
First statement: Investment banks do not take deposits.
Debts a company owes to its creditors and lenders.
Asset quality covers an institutional loan's quality, which reflects the earnings of the institution.
Operating profit margin measures the percentage of each peso sales remaining after
First statement: When you invest in corporate bonds, it means that you are borrowing money to a corporation. Second statement: Corporate bonds are sometimes called long-term commercial papers.
Think of book value as the amount of money a company would theoretically have if it _____________its business and sold everything it owned – tangible property as well as things like patents, brand names, etc.
These are agreements to buy or sell a specific quantity of a commodity at a specified price on a particular date in the future.
Different costs, such as cost of goods sold, operating expenses, and interest expense, incurred during the normal operation of a business.
Projected Earnings Growth or PEG
The Dupont analysis looks at three main components of the ROE ratio, except
The following are the categories of financial ratios, except
This involves comparison of current to past performance, using ratios, enables analysts to assess the firm's progress.
Under this system, revenues are recorded when earned and expenses are recorded when incurred.
The primary purpose of investment banks and investment companies is making loans to its members, usually for the purchase of real estate or homes.
Southern Division reported the following results for 2019 Annual sales P 5,000,000 Net earnings 800,000 Investment 2,500,000 What is the Southern Division’s return on sales
First statement: If the stock’s intrinsic or fair market value is higher than the current price on the market, then the stock is said to be "undervalued". Second statement: If the fair market value is lower than the price on the market, then it is “overvalued".
Stocks that have earnings growing at a faster rate than the market average.
The quick ratio provides better measure of liquidity only when a firm's inventory cannot be easily converted into cash.
The definitions of debt and equity can vary, but generally this indicates how much leverage you're using to operate.
Horizontal, vertical, and common-size analyses are techniques that are used by analysts in understanding the financial statements of companies. Which of the following is an example of vertical, common-size analysis?
Price to Earnings Ratio or P/E
It is used to measure the flow of volume of stocks in positives and negatives over a period of time.
Southern Division reported the following results for 2019 Annual sales P 5,000,000 Net earnings 800,000 Investment 2,500,000 What is Southern Division’s asset turnover?
A company-sponsored retirement account that employees can contribute to
In this financial statement analysis, trend percentages are computed by taking a base year and assigning its figures as a value of 100.
Horizontal analysis is also referred to
They are considered users of funds I. Lenders II. Borrowers III. Savers IV. Investors V. Intermediary
Shares in very small companies are sometimes called
Fundamental analysts focus more on quantitative measures listed below, except
First statement: Fixed annuities are regulated by state insurance commissioners. Second statement: In variable annuity, the insurance company allows to direct annuity payments to different investment options, usually mutual funds.
This is the best choice for investors looking for excellent long-term returns.
Gross profit margin (revenues – _________________) ÷ revenues
First statement: A single ratio is already enough in providing sufficient information to judge the overall performance of the firm.
Index numbers would probably be most interested in which ratio?
Tax levied by the government for income and part of the expenses deducted from revenues when arriving at net income on the income statement.
The quantity, quality, and timing of revenues can determine long-term success.
A method of arriving at net operating cash flow by adjusting each item on the income statement from the accrual basis of accounting to the cash basis of accounting.
The average collection period is meaningful only in relation to the firm's credit term.
The public usually buy stocks from stock brokers.
The financial institution that is responsible for the oversight and management of all other banks is
These ratios give insight into how well investors in the market place feel the firm is doing in terms of risk and return.
A lower times interest earned ratio indicates greater capacity to meet scheduled payments.
In vertical analysis all the items in a particular statement are represented as a percentage of a particular item.
This represents uncollected revenues the company expects to receive within one year.
Assets the company plans to convert to cash, sell, or use during the coming year, including cash, accounts receivable, and inventory on hand.
These are shares in large, well-known companies with a solid history of growth. They generally pay dividends.
Stock analysis helps investors find the best investment opportunities at a given time.
This annuity combines features of securities and insurance products.
Which of the following statements is incorrect?
Operating expenses don't include _____ or taxes.
The underlying assumption of fundamental analysis is that the price on the market does not reflect the stock’s actual value. This is called
Category of stocks that pay dividends consistently
Price to Book Ratio or P/B
_____ and solvency are of interest to lenders and investors.
Publicly traded companies report their profits to shareholders as earnings per share, or ____________ for short.
This refers to the number of pesos earned during the period in behalf of each outstanding share of common stock.
A lack of _____ leads to smaller profits and weaker growth.
Investment banks do not take deposits.
This ratio of analytical measurement measures the productivity of assets regardless of capital structures.
It involves the conversion of items appearing in financial statement columns into terms of percentages of a base figure to show the relative significance of the items to facilitate comparison.The percentage is computed by using this formula: Percentage of base = Amount of individual item x 100 Amount of base
The class of stock issued by all corporations and which represents the real equity account capital is
First statement: If the stock’s intrinsic or fair market value is higher than the current price on the market, then the stock is said to be undervalued. Second statement: If the fair market value is lower than the price on the market, then it is “overvalued.
A financial ratio based on the return on equity ratio that is used to analyze a company’s ability to increase its return on equity.
The average sales per day equals annual sales divided by twelve months.
Penny stocks refer to low-priced stock investments. These stocks are usually traded in stock exchange.
In CAMEL rating system, banks that are given scores greater than three are considered to be high-quality institutions.
It is preferable to use audited financial statements for ratio analysis.
In using CAMEL rating system, banks that are given an average score of less than two are considered to be less-than-satisfactory.
Stocks are
This is commonly used to assess the owner's appraisal of share value.
The security futures contract specifications include
The bottom line of the income statement.
In using CAMEL rating system, banks with scores greater than three are considered to be less-than-satisfactory.
This is often used by short-term traders in search of quick profits, but is generally not well suited for long-term investors.
A.M.Y. Company is preparing its common-size financial statements and revealed the following: (in thousands of pesos) Accounts receivable 20,000 Inventory 40,000 Total current assets 70,000 Total assets 168,000 Bonds payable 42,000 Retained earnings 14,000 Sales revenue 150,000 Cost of goods sold 124,000 Income tax expense 22,000 How’s would A.M.Y’s retained earnings appear on a common-size balance sheet?
What does the bear and the bull stand for?
The assessment and evaluation of the firm's past performance, present condition, and future business potential is generally known as
Bonds are
Financial statements presenting financial data for two or more periods are called
Earnings per share is the peso amount earned on behalf of each share outstanding.
This is another ratio that compares the yearly dividend to a share price.
Provides an assessment of how investors view firm's performance
The comparison of different firm's financial ratios at the same point in time is known as
What does "Short Selling" mean?
If a single customer generates a high percentage of your revenues, you could face financial difficulty if that customer stops buying.
An institution's ability to create appropriate returns to be able to expand, retain competitiveness, and add capital is a key factor in rating its continued viability.
This term refers to the market dealing with the resale and purchase of securities or other titles to property or commodities.
This commonly measures the activity, or liquidity of a firm's inventory
Comparative statements are
What factors affect stock market?
The risk that the issuer may fail to make timely interest or principal payments and thus default on its bonds is known as
First statement: The majority of investment fund assets belong to close-end mutual funds. Second statement: Close-end funds are managed investment funds that issue a fixed number of shares, and trade on an exchange.
It involves methods of calculating and interpreting financial ratios to analyze and monitor firm's performance
In Accrual Accounting System, earned revenues may include ___________ for which you have yet to receive cash and expenses may include bills that you have not yet paid.
Below shows the current assets and current liabilities of Tala Company ASSETS LIABILITIES Current Assets Current Liabilities Cash P 2,550,000 Accounts payable P 9,500,000 Marketable securities 2,000,000 Short-term bank loan 11,375,000 Accounts receivable 16,675,000 Total current liabilities P 20,875,000 Inventories 26,470,000 Total current assets P 47,695,000 Tala’s current ratio is
A single ratio is already enough to provide sufficient information to judge the overall performance of the firm.
This contains more detailed information about a company's financials than the annual report and includes the three financial statements covered in this tutorial.
This means that the data can be measured and stated in a numerical way.
Insurance companies are financial institutions that
Financial statement analysis is used by this interested party to evaluate the attractiveness of the investment in the business.
The place where buyers and sellers meet to decide on the price to buy or sell equity securities,usually with the assistance of a broker.
If the corporation issued only one kind of stock, it should be
A financial statement analysis technique that shows changes in the amounts of corresponding financial statement items over a period of time.
First statement: If inventory is liquid, the quick ratio is the preferred measure of overall liquidity.
The analytical tools used in financial statement analysis are I. Comparative financial statements such as horizontal and vertical analysis II. Technical analysis III. Common-size financial statements IV. Trend analysis V. Fundamental analysis VI. Ratio analysis
This refers to the risk that investors won’t find a market for the bond, potentially preventing them from buying or selling when they want.
First statement: The borrower is the bond holder. Second statement: the lender is the bond issuer.
An investment is well-hedged if:
Earnings left after subtracting the cost of goods sold and operating expenses from a company's revenues on the income statement.
This is a company engaged in the business of dealing with financial and monetary transactions such as deposits, loans, investments, and currency exchange.
In times interest earned ratio, the higher its value, the better for the firm to fulfill its interest obligations.
In this kind financial statement analysis, trend percentages are computed by taking a base year and assigning its figures as a value of 100.
The flip side of current assets, this is money the company expects to pay within one year and includes accounts payable and short-term borrowings.
This measures the percentage of each sales dollar remaining after the firm has paid for its goods.
It refers to the amount of money for investing for a particular purpose.
Examiners should determine earnings by
First statement: As profit margin increases, every sale will bring more money to a company’s bottom line, resulting in a higher overall return on equity. Second statement: As asset turnover increases, a company will generate more sales per asset owned, resulting in a higher overall return on equity.
As asset turnover increases, a company will generate more sales per asset owned, resulting in a higher overall return on equity.
Also known as Cost of Sales, this represents all the expenses directly related to the making and storing of a company's goods, such as raw materials, warehousing, and direct labor costs.
These are some of the tools that professional analysts use to look at a company’s fundamentals, except
A measure of the company’s long-term debt paying ability is
First statement: Assessing asset quality involves rating investment risk factors that the company may face and comparing them with the company's capital earnings. Second statement: Asset quality covers an institutional loan's quality, which reflects the earnings of the institution.
It's not good for the company to have higher gross profit margin.
First statement: Common stockholders can attend at annual general meeting to cast vote or use a proxy. Second statement: Non-cumulative preferred stock is preferred stock for which the right to receive a basic dividend accumulates if the dividend is not paid.
They are interested to know company’s ability to pay dividend, and growth of dividends and maximize their wealth.
ROE tells us how efficiently a company is using its ____________ to earn a profit, and like most metrics, is useful for comparing companies in the same industry.
By analyzing a stock's price history, _____believe you can predict its future price behavior.
To assess a company's liquidity, the examiners should
When a firm compare its ratio values to those of a key competitor or group of competitors, this analysis is known as
When securities are issued and offered by the corporation for the first time to the public, buyers of such issues are referred to
An "illliquid market"is also called a thin market and is characterized by:
Assets that the company does not plan to turn into cash within one year or that would take longer than one year to convert, including property, plants, machinery, and patents.
A.M.Y. Company is preparing its common-size financial statements and revealed the following: (in thousands of pesos) Accounts receivable 20,000 Inventory 40,000 Total current assets 70,000 Total assets 168,000 Bonds payable 42,000 Retained earnings 14,000 Sales revenue 150,000 Cost of goods sold 124,000 Income tax expense 22,000 How would A.M.Y.’s inventory appear on a common-size balance sheet?
The statements for two or more periods are used in horizontal analysis.
This measures the efficiency with which the firm uses all its assets to generate sales.
The data that relates to the quality or character of something, such as how well a company is managed or whether a company has poor customer satisfaction ratings.
Net profit margin measures
A searchable database developed by the SEC that includes all documents and reports filed by U.S. publicly-traded companies since mid-1995.
This method is used when preparing the cash flow statement.
A higher times interest ratio indicates greater capacity to meet scheduled payments.
First statement: If the firm extended 45-day credit term and their average collection period is 40 days may indicate a poorly managed credit collection department.
Horizontal analysis is also referred to common-size analysis.
When the firm earns a profit even after making interest payments to creditors and paying dividends to preferred stockholders, the firm's use of leverage magnifies the return earned by common stockholders.
A firm's market value per share of P 3.50 means that the investors are paying P 3.50 for each P 1.00 of the firm's stock.
First statement: Decrease in financial leverage will lead to an increase in return on equity. Second statement: By splitting ROE into three parts, companies can more easily understand changes in their returns on equity over time.
The magnification of risk and return through the use of fixed cost financing, such as debt and preferred stock is called
First statement: The borrower is the bond holder. Second statement: The lender is the bond issuer.
A company's ______________ should also be taken into consideration when analyzing its stock, and one good way to gauge financial health is by looking at the company's debts.
Norte Company reported the following results for 2019: Annual sales P5,000,000 Net earnings 800,000 Investment 2,500,000 What is Norte Company’s asset turnover?
It is recorded as part of current liabilities on the balance sheet.
_____ addresses your ability to generate sufficient cash to cover cash expenses.
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Introduction to Information Systems
Investment and Portfolio Management
Intermediate Accounting
International Marketing
Internet Marketing and Entrepreneurship
Internet Technology in Real Estate
Fundamentals of Business Analytics
Fundamentals of Accounting Theory and Practice
Entrepreneurship in Tourism and Hospitality
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