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Note: the information in these slides was compiled from the New Horizons student workbook. These slides are intended to be used only in conjunction with the class or those who posses both books. These slide should not be copied elsewhere or sold.
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Note: the information in these slides was compiled from the New Horizons student workbook. These slides are intended to be used only in conjunction with the class or those who posses both books. These slide should not be copied elsewhere or sold. Financial ManagementFlashcard resources for learning about Finance! Definitions Formulas This icon comes back here
Debit The left side of any T account that increases assets and decreases liabilities and owners equity • Credit • Debit • Footing • Transaction
Preferred Stock A form of capital stock that has certain preferences. Dividends are paid out on this first. • Preferred Stock • Common Stock • Junk Bonds • Owner’s Equity
Depreciation The process of allocating the cost of a tangible asset over it’s useful life • Long-term liabilities • Activity Ratios • Fiscal Period • Depreciation
Dividend An Allocation of a company’s net income used for payment to the owners • Operating Profit • Dividends • Owner’s Equity • Working Capital
Capital Stock Consists of investments that the owners of a business have made • Owners Equity • Capital Stock • Asset • Current Assets
Variable Cost Costs that change in relation to the level of activity within a company…sometime associated with number of units produced • Profitability Ratios • Cost of Goods Sold • Variable Costs • Liquid costs
Income Statement A financial report that provides information regarding the profit or loss for the last accounting period • Balance Sheet • General Ledger • Income Statement • Pro Forma financial statement
General Ledger A book that contains all the accounts of the business listed in numerical order low to high • General Ledger • Balance Sheet • General Journal • Horizontal Analysis
General Journal A book of chronological business transactions including a brief description of its purpose and account number. Transactions are first recorded here • General Ledger • Balance Sheet • General Journal • Horizontal Analysis
Cash Flow Statement Provides information about a company’s inflow and outflow of money • Income Statement • Cash Flow Statement • Pro Forma Statement • Income Statement
Pro Forma Statement A forward looking document created when setting a budget – used for establish the projected financial activity for an upcoming accounting period • Income Statement • Cash Flow Statement • Pro Forma Statement • Income Statement
Current Liabilities Debts and obligations that a company expects to pay within 12 months • Expense • Depletion • Current Liabilities • Break even point
Common Stock The most common form of ownership in a business in which dividends are paid to common stockholders after all payments have been made on debts and to preferred stockholders • Preferred Stock • Common Stock • Junk Bonds • Owner’s Equity
Liability The amount of money a business owes a person or company for goods or services rendered • IOU • Operating Expenses • Debit • Liability
Retained Earnings Represents all earnings that a business has accumulated since its inception less any dividends it has paid • Retained Earnings • Withdrawal Account • Party fund • Capital Stock
Asset Everything of value owned and used in a business such as cash, sales, supplies • COGS • Capital Stock • Asset • Liquidity
Owner’s Equity Part of a business that belongs to the owner • Owners Equity • Capital Stock • Asset • Current Assets
Credit The right side of any account that decreases assets and increases liabilities and owner’s equity • Credit • Debit • Footing • Transaction
Financial Formulas to know Mark’s little Finance portal
Working Capital = Current Assets – Current Liabilities • Operating Profit • Dividends • Owner’s Equity • Working Capital
Operating Income = Gross Profit - Sales • Operating income • Dividends • Gross profit on sales • Owners Equity
Gross Profit on Sales = Total Revenue - COGS • Operating income • Dividends • Gross profit on sales • Owners Equity
Current Ratio = Current Assets/Current Liabilities • Current Ratio • Leverage Ratio • Accounting Equation • Profit Margin
Debt to Assets Ratio = Total Liabilities/Total Assets • EBIT • Liquidity Ratio • Debt to Assets Ratio • Retained Earnings
EBIT: Earnings Before Interest and Taxes = Sales – COGS – Operating Expenses + Dividends + Interest • Capital Stock • EBIT • Long Term Liabilities • Net Loss
Accounting Equation = Liabilities + Owner’s Equity • Accounting Equation • Current Assets • Owner’s Equity • Operating Income
COGS: Cost of Goods Sold = Beginning Inventory + purchases to inventory – ending inventory • Inventory Turnover • EBIT • COGS • Current Assets
Net Operating Margin = Operating Profit/Sales • Inventory Turnover • Profit Margin on Sales • Owner’s Equity • Net Operating Margin
Profit Margin on Sales = Net Profit/Sales • Inventory Turnover • Profit Margin on Sales • Owner’s Equity • Net Operating Margin