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Statement of Cash Flows- - Assignment Example
Finance & Accounting
Pages 8 (2008 words)
Name ACCT500 – Financial & Management Accounting Instructor 27 November 2012 Statement of Cash Flows 1- Listed below are eight technical accounting terms introduced in this chapter: Each of the following statements may (or may not) describe one of these technical terms…
The formula for the return on assets is Net income divided by total assets (BPP 2009). Market share _(c) A company's percentage share of total dollar sales within its industry. Working capital _ (d) Current assets less current liabilities. Price-earnings ratio _ (e) A measure reflecting investors' expectations of future profitability. The formula for the price-earnings ratio is price per share divided by earnings per share (EPS) (BPP 2009). Quick ratio _ (f) A measure of short-term solvency often used when a company has large inventories that cannot be quickly converted into cash. The formula for the quick ratio finds the total of all current assets with the exception of inventories and divides the result by the total of all current liabilities. This ratio is the acid test for short term solvency. It takes into consideration the cash cycle of turning inventory into cash, the fact that it may take a while before the inventory and the cash s received by way of cash sale or credit sale. Additionally, inventory can become obsolete. Earnings per share _ (g) A ratio that helps individual stockholders relate the net income of a large corporation to their equity investment. The formula for earnings per share EPS is: Net income divided by number of issued shares. ...
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