WGU C213 Intro to Financial Analysis
Acid Test Ratio - ANS - the Acid-test or quick ratio or liquidity ratio measures the
ability of a company to use its near cash or quick assets to extinguish or retire its
current liabilities immediately
\Asset Turnover - ANS - A financial ratio that gives an overall measure of
company efficiency
\Assets to Equity Ratio - ANS - computed as assets divided by equity and is
interpreted as the number of dollars of assets acquired for each dollar invested
by stockholders.
\Average collection period - ANS - shows the average number of days that elapse
between sale and cash collection
\Cash flow adequacy - ANS - computed as cash from operations divided by
expenditures for fixed asset additions and acquisitions of new businesses,
indicates whether a business is a cash cow
\Cash flow ratios - ANS - information is especially important in those situations in
which net income does not give an accurate picture of the economic performance
of a company.
\Cash flow to net income - ANS - o reflects the extent to which accrual accounting
assumptions and adjustments have been included in computing net income
\Cash times interest earned - ANS - Times interest earned (TIE) is a metric used to
measure a company's ability to meet its debt obligations
\Common Size Financial Statments - ANS - all amounts for a given year being
shown as a percentage of that denominator for the year.
\Current Ratio - ANS - is a comparison of current assets (cash, receivables, and
inventory) with current liabilities.
\Debt Ratio - ANS - frequently used measure of leverage - Total Liabilities / Total
Assets
\DuPont Framework - ANS - systematic approach to identifying general factors
causing ROE to deviate from normal
\Effeicency Ratio - ANS - is typically used to analyze how well a company uses its
assets and liabilities internally
\External Users - ANS - investors and creditors, financial statement analysis plays
the same role in the decision-making process
\Financial Ratios - ANS - Relationships between financial statement amounts
\Financial statement analysis - ANS - involves the examination of both the
relationships among financial statement numbers and the trends in those
numbers over time
Acid Test Ratio - ANS - the Acid-test or quick ratio or liquidity ratio measures the
ability of a company to use its near cash or quick assets to extinguish or retire its
current liabilities immediately
\Asset Turnover - ANS - A financial ratio that gives an overall measure of
company efficiency
\Assets to Equity Ratio - ANS - computed as assets divided by equity and is
interpreted as the number of dollars of assets acquired for each dollar invested
by stockholders.
\Average collection period - ANS - shows the average number of days that elapse
between sale and cash collection
\Cash flow adequacy - ANS - computed as cash from operations divided by
expenditures for fixed asset additions and acquisitions of new businesses,
indicates whether a business is a cash cow
\Cash flow ratios - ANS - information is especially important in those situations in
which net income does not give an accurate picture of the economic performance
of a company.
\Cash flow to net income - ANS - o reflects the extent to which accrual accounting
assumptions and adjustments have been included in computing net income
\Cash times interest earned - ANS - Times interest earned (TIE) is a metric used to
measure a company's ability to meet its debt obligations
\Common Size Financial Statments - ANS - all amounts for a given year being
shown as a percentage of that denominator for the year.
\Current Ratio - ANS - is a comparison of current assets (cash, receivables, and
inventory) with current liabilities.
\Debt Ratio - ANS - frequently used measure of leverage - Total Liabilities / Total
Assets
\DuPont Framework - ANS - systematic approach to identifying general factors
causing ROE to deviate from normal
\Effeicency Ratio - ANS - is typically used to analyze how well a company uses its
assets and liabilities internally
\External Users - ANS - investors and creditors, financial statement analysis plays
the same role in the decision-making process
\Financial Ratios - ANS - Relationships between financial statement amounts
\Financial statement analysis - ANS - involves the examination of both the
relationships among financial statement numbers and the trends in those
numbers over time
