EEE 2023 FINAL EXAM STUDTY GUIDE
Accounts Receivable - Answers :the money owed to a firm by its customers
assumption sheet - Answers :an explanation in a new firm's business plan of the
sources of the numbers for its financial forecast and the assumptions used to generate
them
Balance Sheet - Answers :a snapshot of a company's assets, liabilities and owner's
equity at a specific point in time
break-even point - Answers :the point where total revenue received equals total costs
associated with the output
budgets - Answers :itemized forecasts of a company's income expenses, and capital
needs that are also important tools for financial planning and controlling
constant ratio method of forecasting - Answers :a forecast approach using the precent
of sales method in which expense items on a firm's income statement are expected to
grow at the same rates as sales
cost of sales - Answers :all of the direct costs associated with producing or delivering a
product or service, including the material costs and direct labor costs
current assets - Answers :cash plus items that are readily convertible to cash, such as
accounts receivable, inventories, and marketable securities
current liabilities - Answers :obligations that are payable within a year, including
accounts payable, accrued expenses and the current portion of long-term debt
current ratio - Answers :a ratio that equals the firm's current assets divided by its current
liabilities
debt-to-equity ratio - Answers :a ratio calculated by dividing the firm's long-term debt by
its shareholders' equity
efficiency - Answers :how productively a firm utilizes its assets relative to its rate of
return
financial management - Answers :the process of raising money and managing a
company's finances in a way that achieves the highest rate of return
financial ratios - Answers :ratios showing the relationship between items on a firm's
financial statements that are used to discern whether a firm is meeting its financial
objectives and how it stacks up against industry peers
, financial statement - Answers :written reports that quantitatively describe a firm's
financial health
financing activities - Answers :activities that raise cash during a certain period by
borrowing money or selling stock, and/or use cash during a certain period by paying
dividends, buying back outstanding stock, or buying back outstanding bonds
fixed assets - Answers :assets used over a longer time frame, such as real estate,
buildings, equipment and furniture
forecasts - Answers :estimates of a firm's future income and expenses, based on its
past performance, its current circumstances and its future plans
historical financial statements - Answers :reflect past performances and are usually
prepared on a quarterly and annual basis
income statement - Answers :a financial statement that reflects the results of the
operations of a firm over a specified period of time: prepared on a monthly, quarterly,
and annual basis
inventory - Answers :a company's merchandise, raw materials, and products waiting to
be sold
investing activities - Answers :activities that include the purchase, sale or investment in
fixed assets, such a real estate or buildings
liquidity - Answers :the ability to sell a business or other assets quickly at a price that is
close to market value; also, a company's ability to meet its short-term financial
obligations
long-term liabilities - Answers :notes or loans that are repayable beyond one year,
including liabilities associated with purchasing real estate, buildings and equipment
net sales - Answers :total sales minus allowances for returned goods and discounts
operating activities - Answers :activities that affect net income (or loss), depreciation,
and changes in current assets and current liabilities other than cash and short-term debt
operating expenses - Answers :marketing, administrative costs, and other expenses not
directly related to producing a product or service
other assets - Answers :miscellaneous assets including accumulated goodwill
owner's equity - Answers :the equity invested in the business by its owner(s) plus the
accumulated earnings retained by the business after paying dividends
Accounts Receivable - Answers :the money owed to a firm by its customers
assumption sheet - Answers :an explanation in a new firm's business plan of the
sources of the numbers for its financial forecast and the assumptions used to generate
them
Balance Sheet - Answers :a snapshot of a company's assets, liabilities and owner's
equity at a specific point in time
break-even point - Answers :the point where total revenue received equals total costs
associated with the output
budgets - Answers :itemized forecasts of a company's income expenses, and capital
needs that are also important tools for financial planning and controlling
constant ratio method of forecasting - Answers :a forecast approach using the precent
of sales method in which expense items on a firm's income statement are expected to
grow at the same rates as sales
cost of sales - Answers :all of the direct costs associated with producing or delivering a
product or service, including the material costs and direct labor costs
current assets - Answers :cash plus items that are readily convertible to cash, such as
accounts receivable, inventories, and marketable securities
current liabilities - Answers :obligations that are payable within a year, including
accounts payable, accrued expenses and the current portion of long-term debt
current ratio - Answers :a ratio that equals the firm's current assets divided by its current
liabilities
debt-to-equity ratio - Answers :a ratio calculated by dividing the firm's long-term debt by
its shareholders' equity
efficiency - Answers :how productively a firm utilizes its assets relative to its rate of
return
financial management - Answers :the process of raising money and managing a
company's finances in a way that achieves the highest rate of return
financial ratios - Answers :ratios showing the relationship between items on a firm's
financial statements that are used to discern whether a firm is meeting its financial
objectives and how it stacks up against industry peers
, financial statement - Answers :written reports that quantitatively describe a firm's
financial health
financing activities - Answers :activities that raise cash during a certain period by
borrowing money or selling stock, and/or use cash during a certain period by paying
dividends, buying back outstanding stock, or buying back outstanding bonds
fixed assets - Answers :assets used over a longer time frame, such as real estate,
buildings, equipment and furniture
forecasts - Answers :estimates of a firm's future income and expenses, based on its
past performance, its current circumstances and its future plans
historical financial statements - Answers :reflect past performances and are usually
prepared on a quarterly and annual basis
income statement - Answers :a financial statement that reflects the results of the
operations of a firm over a specified period of time: prepared on a monthly, quarterly,
and annual basis
inventory - Answers :a company's merchandise, raw materials, and products waiting to
be sold
investing activities - Answers :activities that include the purchase, sale or investment in
fixed assets, such a real estate or buildings
liquidity - Answers :the ability to sell a business or other assets quickly at a price that is
close to market value; also, a company's ability to meet its short-term financial
obligations
long-term liabilities - Answers :notes or loans that are repayable beyond one year,
including liabilities associated with purchasing real estate, buildings and equipment
net sales - Answers :total sales minus allowances for returned goods and discounts
operating activities - Answers :activities that affect net income (or loss), depreciation,
and changes in current assets and current liabilities other than cash and short-term debt
operating expenses - Answers :marketing, administrative costs, and other expenses not
directly related to producing a product or service
other assets - Answers :miscellaneous assets including accumulated goodwill
owner's equity - Answers :the equity invested in the business by its owner(s) plus the
accumulated earnings retained by the business after paying dividends
