ch 3 fin study guide Essay

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common-sized statement - a statement which presents all items in percentage terms is called a financial ratios - relationships ddetermind from a firms financial information and used for comparison purposes are known as utilization ratios - short term solvency ratios are also reffered to as the current ratio is defined as current assets - divided by current liabilities the acid-test ratio is also called the - quick ratio the cash ratio is defined by - current liabilities leverage ratios - ratios which analyze a firms ability to meet its long term obligations are called equity multiplier - the ratio which includes all debts of all maturities to all creditors is called the times interest earned ratio - the financial ratio which is defined as earnings before interest and taxes divided byinterest paid is called the the cash coverage ratio is defined - as earnings before intrest and taxes plus depreciation divided by interest paid asset utilisation ratios are defined as those ratios which measure how efficiently a firm uses its - assets to generate sales the inventory turnover ratio is defined as - costs of goods sold divided by inventory the number of days it takes a firm to sell its inventory is called the - days sales inventory the number of times a firm collects their outstanding credit accounts and reloans the money in one year is called the - receivables turnover
365 days divided by the receivables turnover - the days sales in receivables is defined as sales divided by total assets is referred to as the - total assset turnover the group of fratios which are focused on net income are referred to as - liquidity ratios the ratio related to the amount of profit a firm earns for every $1 in sales is called the profit margin

the financial ratio measured as net income divided by total assets is known as a firms return on assets the amount of profit a firm earns for every $1 of equity is referref to as the - return on equity the ratios which involve the current price of one share of a firms common stock are referred to as - market value measures the relationship between a firms earnings and the multiple of those earnings which investors are willing to pay to purchase one share of stock is called the - price-earnings ratio market to book ratio - the relationship between current selling price of a chare of stock and the related accounting value f that share is called the then the return on equity is decomposed into three parts, it is referred to as the - du pont identity dividend payout ratio - the percentage of a cirms net income that is distirbuted to shareholders is called the retention ratio - the percentage of a firms net income which is transferred into retained earnings is known as the the internal growth rate is best described as the _______ growth rate achievable maximum, w/o external financing of any king the sustainable growth rate is described as the ______ growth rate achievable maximum. w/o using any exxternal equity financing while maintaing a constant debteequity ratio when a financial analyst compares the current ratio and the profit margin of a firm over a serioes of years, the analyst is condicting a type of analysis known as - time-trend analysis firms w similiar assets operations, and markets - a peer group analysis is best defined as a comparison of
Standard Industrial Classification SIC system - the us government coding system that classifies firms by their specific tpype of business operation long term debt account to decrease - Baker and SOns is issuing more shares of common stock and purchasing equipment with the procedes of the sotckc offering. on the common size balance sheet of the firm, the transaction will cause the percentage value for the

which of the following is correct concerning the percentages found on a common size income statement - the cost of goods sold percentage should remain relatively constant over time unless the wholesale or