Accounting Fundamentals
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1. Balance sheet in french: Bilan
2. Balance sheet definition: Summarizes a company's assets, liabilities and shareholder's equity at a
specific point in time.
Assets = Liabilities + SE
3. Balance sheet components: - Current assets (actifs court-terme)
- Fixed / non-current assets (actifs long-terme)
- Current liabilities (passif court-terme)
- Non-current / long-term liabilities (passif long-terme)
- Shareholder's equity (capitaux propres)
4. Current assets (actifs court-terme): Cash, as well as other assets you expect to turn into cash within
the next 12 months. Includes:
- Cash (encaisse/liquidités)
- Cash equivalents (équivalent de liquidités)
- Stock or inventory (inventaire)
- Accounts receivable (comptes recevables)
- Marketable securities (valeurs mobilières)
- Prepaid expenses (dépenses prépayées)
- Other liquid assets (autres actifs liquides)
5. Fixed / Non-current assets (actifs long-terme): Property or equipment the company owns and
uses in its operations to generate income. Fixed assets are purchased for long-term use (longer than 1 year). Their
value decreases over time because of wear and tear. This change is recorded as depreciation on the income statement.
6. Exemples of fixed / non-current assets: Buildings, computer equipment, software, furniture, land,
machinery, vehicles, long-term investments, goodwill, copyrights, trademarks, intellectual property
7. Current liabilities (passif court-terme): Debts and other obligations to creditors that will be due
within the next 12 months
8. Exemples of current liabilities: - Accounts payable (comptes payable)
- Credit card bills
- Sales taxes collected
- Payroll liabilities
- Loan payments
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9. Long-term / Non-current liabilities (passif long-terme): Debts and other obligations to
creditors that will not be due in the next 12 months
10. Exemples of long-term / non-current liabilities: Term loans and mortgages
11. Shareholder's equity (capitaux propres): This is made up of common and preferred stock,
paid-in capital, as well as retained earnings, meaning the accumulated company profits that have not been distributed
to shareholders.
12. Current ratio / working capital ration in french: Ratio de liquidité générale ou ration du
fonds de roulement
13. Current ratio / working capital ratio: The current ratio is the difference between current assets
and current liabilities. It measures your business' ability to meet its short-term liabilities when they come due. Ratio of
1.2 to 1 considered acceptable (industry specific)
14. Current ratio formula: Current Ratio = Current Assets / Current Liabilities
15. Quick ratio / Acid test in french: Ratio de liquidité relative
16. Quick ratio / acid test: The quick ratio provides the same information as the current ratio, however it
excludes inventory. The quick ratio therefore provides a portrait of the company's immediate liquidity, since inventory,
which cannot be quickly converted into cash, is not taken into account. It mainly applies to businesses that hold inventory,
as opposed to service businesses.
17. Quick Ratio Formula: (Current Assets - Inventory) / Current Liabilities
18. Debt capacity (capacité d'endettement): Shows both a company's ability to service its current
debt payments and its ability to raise cash through new debt, if necessary. This might include helping the company
through a market downturn or helping the company take advantage of opportunities as they arise
19. Debt capacity ratios: - Debt-to-equity ratio
- Debt servicing ratio
- Debt-to-total assets ratio
20. Debt-to-equity ratio (Ratio emprunts / capitaux propres): The debt-to-equity ratio
shows how much a company is owned by creditors compared with how much shareholder equity is held by the company.
The debt-to-equity ratio is primarily used to evaluate a company's ability to raise cash from new debt. That assessment
is made by comparing the ratio to other companies in the same industry. The higher it is, the more a company is said
to be leveraged. Highly leveraged companies carry more risk of missing debt payments when revenue decline. They
are also less able to raise new debt.
21. Debt-to-equity ratio formula: D/E = (Short-term debt + long term debt + other fixed payments) /
Shareholder's equity
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Study online at https://quizlet.com/_htqsuf
1. Balance sheet in french: Bilan
2. Balance sheet definition: Summarizes a company's assets, liabilities and shareholder's equity at a
specific point in time.
Assets = Liabilities + SE
3. Balance sheet components: - Current assets (actifs court-terme)
- Fixed / non-current assets (actifs long-terme)
- Current liabilities (passif court-terme)
- Non-current / long-term liabilities (passif long-terme)
- Shareholder's equity (capitaux propres)
4. Current assets (actifs court-terme): Cash, as well as other assets you expect to turn into cash within
the next 12 months. Includes:
- Cash (encaisse/liquidités)
- Cash equivalents (équivalent de liquidités)
- Stock or inventory (inventaire)
- Accounts receivable (comptes recevables)
- Marketable securities (valeurs mobilières)
- Prepaid expenses (dépenses prépayées)
- Other liquid assets (autres actifs liquides)
5. Fixed / Non-current assets (actifs long-terme): Property or equipment the company owns and
uses in its operations to generate income. Fixed assets are purchased for long-term use (longer than 1 year). Their
value decreases over time because of wear and tear. This change is recorded as depreciation on the income statement.
6. Exemples of fixed / non-current assets: Buildings, computer equipment, software, furniture, land,
machinery, vehicles, long-term investments, goodwill, copyrights, trademarks, intellectual property
7. Current liabilities (passif court-terme): Debts and other obligations to creditors that will be due
within the next 12 months
8. Exemples of current liabilities: - Accounts payable (comptes payable)
- Credit card bills
- Sales taxes collected
- Payroll liabilities
- Loan payments
1/7
, Accounting Fundamentals
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9. Long-term / Non-current liabilities (passif long-terme): Debts and other obligations to
creditors that will not be due in the next 12 months
10. Exemples of long-term / non-current liabilities: Term loans and mortgages
11. Shareholder's equity (capitaux propres): This is made up of common and preferred stock,
paid-in capital, as well as retained earnings, meaning the accumulated company profits that have not been distributed
to shareholders.
12. Current ratio / working capital ration in french: Ratio de liquidité générale ou ration du
fonds de roulement
13. Current ratio / working capital ratio: The current ratio is the difference between current assets
and current liabilities. It measures your business' ability to meet its short-term liabilities when they come due. Ratio of
1.2 to 1 considered acceptable (industry specific)
14. Current ratio formula: Current Ratio = Current Assets / Current Liabilities
15. Quick ratio / Acid test in french: Ratio de liquidité relative
16. Quick ratio / acid test: The quick ratio provides the same information as the current ratio, however it
excludes inventory. The quick ratio therefore provides a portrait of the company's immediate liquidity, since inventory,
which cannot be quickly converted into cash, is not taken into account. It mainly applies to businesses that hold inventory,
as opposed to service businesses.
17. Quick Ratio Formula: (Current Assets - Inventory) / Current Liabilities
18. Debt capacity (capacité d'endettement): Shows both a company's ability to service its current
debt payments and its ability to raise cash through new debt, if necessary. This might include helping the company
through a market downturn or helping the company take advantage of opportunities as they arise
19. Debt capacity ratios: - Debt-to-equity ratio
- Debt servicing ratio
- Debt-to-total assets ratio
20. Debt-to-equity ratio (Ratio emprunts / capitaux propres): The debt-to-equity ratio
shows how much a company is owned by creditors compared with how much shareholder equity is held by the company.
The debt-to-equity ratio is primarily used to evaluate a company's ability to raise cash from new debt. That assessment
is made by comparing the ratio to other companies in the same industry. The higher it is, the more a company is said
to be leveraged. Highly leveraged companies carry more risk of missing debt payments when revenue decline. They
are also less able to raise new debt.
21. Debt-to-equity ratio formula: D/E = (Short-term debt + long term debt + other fixed payments) /
Shareholder's equity
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