A+)
Classified Balance Sheet - Answers A balance sheet that groups together similar assets and similar
liabilities, using a number of standard classifications and sections.
current assets - Answers cash and other assets expected to be exchanged for cash or consumed within a
year
Operating Cycle - Answers The time span during which cash is paid for goods and services, which are
then sold to customers from whom the business collects cash.
Long-term investments - Answers Generally, (1) investments in stocks and bonds of other corporations
that companies hold for more than one year; (2) long-term assets, such as land and buildings, not
currently being used in the company's operations; and (3) long-term notes receivable.
Property, Plant, and Equipment - Answers assets with relatively long useful lives that are currently used
in operating the business
intangible assets - Answers assets that do not have physical substance
Current Liabilities - Answers Obligations that a company expects to pay within the next year or operating
cycle, whichever is longer.
Long-term liabilities (long-term debt) - Answers obligations that a company expects to pay after one year
ratio analysis - Answers relationship among selected items of financial statement data
ratio - Answers the mathematical relationship between two numbers or amounts
intracompany comparisons - Answers covering two years for the same company
industry-average comparisons - Answers based on average ratios for particular industries
intercompany comparisons - Answers based on comparisons with a competitor in the same industry
Profitability Ratios - Answers ratios that measure the rate of return a firm is earning on various
measures of investment (success of a company over a given time)
earnings per share - Answers net income or profit divided by the number of stock shares outstanding
Liquidity - Answers the ease with which an asset can be converted into the economy's medium of
exchange
Working Capital - Answers current assets - current liabilities
Liquidity Ratios - Answers Measures of the short-term ability of the company to pay its maturing
obligations and to meet unexpected needs for cash.