The Financial Statements quiz #6 Flashcards
The Financial Statements quiz #6
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What is the meaning of 'management discussion and analysis (MD&A)'?
'Management discussion and analysis (MD&A)' is a section of the annual report where management discusses financial results and future plans. What is the meaning of 'annual report'?
'Annual report' is a comprehensive report on a company's activities and financial performance throughout the preceding year. What is the meaning of 'interim report'?
'Interim report' is a financial report covering a period of less than a full year, such as a quarter. What is the meaning of 'pro forma financial statements'?
'Pro forma financial statements' are financial statements prepared using assumptions or projections. What is the meaning of 'restated financial statements'?
'Restated financial statements' are revised statements issued to correct errors or reflect changes in accounting policies. What is the meaning of 'comparative analysis' in financial statements?
'Comparative analysis' involves comparing financial data across different periods or companies to identify trends and differences. What is the meaning of 'trend analysis' in financial statements?
'Trend analysis' examines financial statement data over time to identify patterns and changes. What is the meaning of 'vertical analysis' in financial statements?
'Vertical analysis' expresses each item in a financial statement as a percentage of a base amount. What is the meaning of 'horizontal analysis' in financial statements?
'Horizontal analysis' compares financial data across periods to identify increases or decreases. What is the meaning of 'common-size financial statements'?
'Common-size financial statements' present all items as percentages of a base figure, such as total assets or sales. What is the meaning of 'ratio analysis' in financial statements?
'Ratio analysis' uses financial ratios to evaluate a company's performance and financial health. What is the meaning of 'liquidity ratios'?
'Liquidity ratios' measure a company's ability to meet short-term obligations. What is the meaning of 'solvency ratios'?
'Solvency ratios' measure a company's ability to meet long-term obligations. What is the meaning of 'profitability ratios'?
'Profitability ratios' measure a company's ability to generate profit relative to sales, assets, or equity. What is the meaning of 'efficiency ratios'?
'Efficiency ratios' measure how effectively a company uses its assets and manages its operations. What is the meaning of 'market ratios'?
'Market ratios' evaluate a company's stock price relative to earnings, book value, or dividends. What is the meaning of 'book value'?
'Book value' is the value of an asset or company as reported on the balance sheet. What is the meaning of 'market capitalization'?
'Market capitalization' is the total market value of a company's outstanding shares. What is the meaning of 'dividend payout ratio'?
'Dividend payout ratio' is the proportion of earnings paid out as dividends to shareholders. What is the meaning of 'retention ratio'?
'Retention ratio' is the proportion of earnings retained in the business rather than paid out as dividends. What is the meaning of 'operating cycle'?
'Operating cycle' is the time it takes to purchase inventory, sell it, and collect cash from customers. What is the meaning of 'cash conversion cycle'?
'Cash conversion cycle' measures the time between cash outflows for inventory and cash inflows from sales. What is the meaning of 'gross margin'?
'Gross margin' is gross profit divided by sales revenue, expressed as a percentage. What is the meaning of 'operating margin'?
'Operating margin' is operating income divided by sales revenue, expressed as a percentage. What is the meaning of 'net margin'?
'Net margin' is net income divided by sales revenue, expressed as a percentage. What is the meaning of 'EBITDA'?
'EBITDA' stands for earnings before interest, taxes, depreciation, and amortization. What is the meaning of 'EBIT'?
'EBIT' stands for earnings before interest and taxes. What is the meaning of 'free cash flow'?
'Free cash flow' is cash generated by the business after accounting for capital expenditures. What is the meaning of 'capital expenditures (CapEx)'?
'Capital expenditures (CapEx)' are funds used to acquire or upgrade long-term assets. What is the meaning of 'net working capital'?
'Net working capital' is current assets minus current liabilities. What is the meaning of 'debt service coverage ratio'?
'Debt service coverage ratio' measures a company's ability to pay its debt obligations. What is the meaning of 'interest coverage ratio'?
'Interest coverage ratio' measures a company's ability to pay interest on its debt. What is the meaning of 'asset turnover ratio'?
'Asset turnover ratio' measures how efficiently a company uses its assets to generate sales. What is the meaning of 'inventory turnover ratio'?
'Inventory turnover ratio' measures how many times inventory is sold and replaced during a period. What is the meaning of 'accounts receivable turnover ratio'?
'Accounts receivable turnover ratio' measures how quickly a company collects its receivables. What is the meaning of 'accounts payable turnover ratio'?
'Accounts payable turnover ratio' measures how quickly a company pays its suppliers. What is the meaning of 'days sales outstanding (DSO)'?
'Days sales outstanding (DSO)' measures the average number of days it takes to collect receivables. What is the meaning of 'days inventory outstanding (DIO)'?
'Days inventory outstanding (DIO)' measures the average number of days inventory is held before being sold. What is the meaning of 'days payable outstanding (DPO)'?
'Days payable outstanding (DPO)' measures the average number of days it takes to pay suppliers. What is the meaning of 'return on assets (ROA)'?
'Return on assets (ROA)' is net income divided by average total assets.
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