D196 - Unit 3

Dividends

Earnings that are not retained in the business

Disclusre

Explaining estimates and judgements in the notes to financial statements instead of in the financial statement

Comparative financial statements

Financial statements that include information for both the current year and preceding year(s) that are prepared for users to identify any significant changes in particular items

Recognition

Including estimates and judgements in the financial statements

Current liabilities

Liabilities expected to be satisified within a year or the current operating cycle, whichever is longer

Long-term liabilities

Liabilities that are not expected to be satisfied within a year

Losses

Money lost on activities outside the normal business of a company

Gains

Money made on activities outside the normal business of a company

From 10-Q

Quarterly financial reports that publicly traded companies must file with the SEC

Balance sheet (time period)

Report at a point in time

Income Statement (time period)

Report on a period of time

Earnings (loss) per share (EPS)

The amount of net income (earnings) related to each share of stock; computed by dividing net income by the number of shares of stock outstanding during this period

Primary financial statements

The balance sheet, income statement, and statement of cash flows, which are used by external groups to assess a company's economic standing

Net Loss

The difference between Revenue and Expenses when expenses exceed revenue

Net Income

The difference between Revenue and expenses when revenue exceeds expenses (earnings, profit)

Gross Profit

The difference between sales and cost of goods sold; gross margin

Gross Margin

The difference between sales and cost of goods sold; gross profit

Statement of Cash Flows

The financial statement that reports the amount of cash collected and paid out by a company during a period of time. Operating, Investing, Financing activities

Articulation

The interrelationships among the financial statements

Stockholders' equity

The owners' equity section of a corporate balance sheet

Market value

The value of a company as measured by the number of shares of stock outstanding multiplied by the current market price of the stock; the current value of a business

Book value

The value of a company measured by the amount of owner's equity in the company

Stockholders

Those who own a corporation by owning shares of stock in that corporation; also called shareholders

Shareholders

Those who own a corporation by owning shares of stock in the corporation; also called stockholders

Statement of Retained Earnings

a statement of the earnings that have been retained in the business since inception (day one)

Classified balance sheet

A balance sheet that distinquishes between current and long-term assets

Income Statement

A financial statement showing revenue minus expenses for a given financial period (month, quarter, year)

Form 10-K

A form required by the SEC for businesses to report a comprehensive summary of financial performance, including the three primary financial statements

Net Income

A line on the income statement that reports t a company's operating income minus interest expense and taxes

Operating Income

A line on the income statement that reports the results of what a company does on a daily basis; calculated by sales minus cost of goods sold minus operating expenses.

Horizontal analysis

A method of financial statement analysis that compares a firm's results from year to year

Investing Activities

Activities associated with buying and selling long-term assets

Operating Activities

Activities that are part of the day-to-day business of a company

Financing Activities

Activities whereby cash is obtained from or repaid to owners and creditors

Accounting equation

Assets = Liabilities = Owners' equity

Expenses

Assets consumed through business operations

Revenue

Assets created through the sale of goods or services

Long-term assets

Assets that are illiquid and that are needed to operate a business over an extended period of time

Liquid

Assets that are in the form of cash or can be easily converted into cash

Iliquid

Assets that take time and effort to convert into cash

Current assets

Cash and other assets that are expected to be converted to cash within a year

Balance sheet

the financial statemetn that reports a company's assets, liabilities, and owner's equity at a particular date.