Home
Explore
Exams
Search for anything
Login
Get started
Home
Business
BS Financial perspective
5.0
(2)
Rate it
Studied by 36 people
Learn
Practice Test
Spaced Repetition
Match
Flashcards
Card Sorting
1/55
Earn XP
Description and Tags
Business
Add tags
Study Analytics
All
Learn
Practice Test
Matching
Spaced Repetition
Name
Mastery
Learn
Test
Matching
Spaced
No study sessions yet.
56 Terms
View all (56)
Star these 56
1
New cards
Expenses
Short-term costs, often recurring, that are recorded on the income statement
2
New cards
Expenditures
One time purchases that add long-term value to the company over the years. Recorded on the balance sheet
3
New cards
Shareholder's equity
the total sum of money invested into a business by the owners of the company
4
New cards
Share capital
the money put into the business when the shareholders bought newly issued shares
5
New cards
Reserves
profit owned by the shareholders that has not been repaid yet, also includes retained profit
6
New cards
Financial Accounting
accounting for the purpose of informing external stakeholders following accounting systems and procedures (regulated by law)
7
New cards
Management Accounting
accounting for internal purposes using company-internal analyses such as forecasting profits (not regulated by law)
8
New cards
Three main pillars of accounting
Cash flow statement, the income statement, the balance sheet
9
New cards
Straight-line depreciation
depreciation by the same amount per period
10
New cards
Net worth/Equity
Assets - Liabilities
11
New cards
Financial performance
Increase in value of the company within a specific time period
12
New cards
Matching principle of accounting
We need to match for each year the monetary value of produced/sold to the value of resources consumed to produce/sell
13
New cards
Operating cash flow
Generated and lost doing daily businesses, measures internal financing capability
14
New cards
Cash flow from investing
All to do with assets
15
New cards
Free cash flow
Cash flow from operations + cash flow from investing
16
New cards
Cash flow from financing
Includes new equity and long-term borrowing
17
New cards
Income statement
Provides information on sources of profit
18
New cards
Can you have an objective number to measure financial performance
No
19
New cards
Why is income statement important
Allows to assess how the business works and can be improved
20
New cards
Depreciation on an income statement
allocation of the net cash flow for making the good available to the years when the resource consumption of the taxi occurred
21
New cards
Income statement's matching principle
the expenses for the good (depreciation) should be allocated proportionally to the generated revenues
22
New cards
Operating profit
revenues - expenses
23
New cards
EBIT
Earnings before Interest and Taxes
24
New cards
Other ways profit can be seen on the income statement
Earnings or Net income
25
New cards
Two methods of measuring profit on an income statement
Cost of sales and cost of production
26
New cards
Cost of sales
Profit = monetary value of sold g/s - value of resources consumed
27
New cards
Cost-of-production method
Profit = monetary value of g/s produced - value of resources consumed
28
New cards
Balance sheet what does it show
which assets the company owns and who provided the financial capital
29
New cards
How is balance sheet important
for assessing which assets are used in running the company and for assessing how risky the company is for creditor's
30
New cards
If profit is not distributed to owners ... on the balance sheet
profit is added to equity in the next opening statement
31
New cards
Depreciation on a balance sheet
Decline in value
32
New cards
Balance sheet depreciation logic
A capital good loses more of its value in the early years of use
33
New cards
Assets on a balance sheet order major groups
Non-curent assets, current assets
34
New cards
Claims structure on a balance sheet
Equity, liabilities, profit
35
New cards
Intangibles on a balance sheet
only listed when their value is verifiable
36
New cards
Claims
Liabilities, where the money for financing the assets comes from
37
New cards
rule for financial ratios
The capital in the denominator should always correspond to the definition of profit used in the numerator
38
New cards
Return on investment
profit/invested capital
39
New cards
Invested capital
capital used to generate the profit
40
New cards
Value driver system
Using ROI to see the drivers of profit
41
New cards
Return on Capital employed
EBIT/Capital employed or Operating Profit/Operating Assets
42
New cards
Return on Equity
Profit/Equity
43
New cards
Profit Margin
Profit/Revenue
44
New cards
Liquidity Ratio
Current Assets/Short-term liabilities
45
New cards
Gearing
Debt(liabilities)/Equity
46
New cards
Investment decisions
decisions about business transactions with an initial cash outflow in the expectation of higher future cash inflow
47
New cards
Investment Theory
theory about investigating investment decisions and developing criteria for reasonable decision making
48
New cards
Financing decisions
decisions about provision of funds needed that start with a cash inflow, followed by a cash outflow (interest and repayment)
49
New cards
Financial theories
deal with analyses of financing opportunities and structures
50
New cards
Capital Market Theories
deal with the mechanics of markets for shares and bonds
51
New cards
Internal rate of return
a discount rate that makes the net present value of all cash flows equal to zero in a discounted cash flow analysis.
52
New cards
Calculating value of a company balance sheet logic
Use assets - liabilities = equity
53
New cards
Calculating value of a company investment perspective
Discounting formula
54
New cards
Calculating value of a company stock market perspective
Through market capitalisation
55
New cards
Market capitalisation formula
price of a single share x number of shares
56
New cards
Market capitalisation is a result of
future expectations
Explore top notes
Critical Reading: Improving Critical Reading Comprehension
Updated 867d ago
Note
Preview
BIO: Unit 1 Study Guide
Updated 943d ago
Note
Preview
APUSH CHAPTER 18 notes
Updated 407d ago
Note
Preview
Efficiency
Updated 938d ago
Note
Preview
Poetic Devices
Updated 96d ago
Note
Preview
Chapter 6: Christianity "The Way of Salvation"
Updated 863d ago
Note
Preview
Раздел 8: Экосистемы
Updated 765d ago
Note
Preview
Unit 1: Rhetoric and the Elements of Style
Updated 761d ago
Note
Preview
Explore top flashcards
Supreme Court Case Test
Updated 763d ago
Flashcards (59)
Preview
APUSH UNIT 11
Updated 755d ago
Flashcards (90)
Preview
Human Anatomy Quiz 14: Nervous Tissue
Updated 836d ago
Flashcards (45)
Preview
HGAP 6.5 - 6.7
Updated 793d ago
Flashcards (39)
Preview
MIcroeconomics Exam 1 Study guide
Updated 245d ago
Flashcards (76)
Preview
german food
Updated 902d ago
Flashcards (39)
Preview
Timeline
Updated 737d ago
Flashcards (79)
Preview
World History Fall Semester Finals- Mr. Burke class
Updated 38m ago
Flashcards (211)
Preview