Financial Management Flashcard resources for learning about Finance! This icon comes back here Note: the information in these slides was compiled from.

Financial ManagementFlashcard resources for learning about Finance!

This icon comes back here

Note: the information in these slides was compiled from the New Horizons student workbook. These slides are intended to be used only in conjunction with the class or those who posses both books. These slide should not be copied elsewhere or sold.

Definitions

Formulas

Debit

The left side of any T account that increases assets and decreases liabilities and owners equity

1.1.CreditCredit

2.2.DebitDebit

3.3.FootingFooting

4.4.TransactionTransaction

Preferred Stock

A form of capital stock that has certain preferences. Dividends are paid out on this first.

1.1.Preferred StockPreferred Stock

2.2.Common StockCommon Stock

3.3.Junk BondsJunk Bonds

4.4.Owner’s EquityOwner’s Equity

Depreciation

The process of allocating the cost of a tangible asset over it’s useful life

1.1.Long-term liabilitiesLong-term liabilities

2.2.Activity RatiosActivity Ratios

3.3.Fiscal PeriodFiscal Period

4.4.DepreciationDepreciation

Dividend

An Allocation of a company’s net income used for payment to the owners

1.1.Operating ProfitOperating Profit

2.2.DividendsDividends

3.3.Owner’s EquityOwner’s Equity

4.4.Working CapitalWorking Capital

Capital Stock

Consists of investments that the owners of a business have made

1.1.Owners EquityOwners Equity

2.2.Capital StockCapital Stock

3.3.AssetAsset

4.4.Current AssetsCurrent Assets

Variable Cost

Costs that change in relation to the level of activity within a company…sometime associated with number of units produced

1.1.Profitability RatiosProfitability Ratios

2.2.Cost of Goods SoldCost of Goods Sold

3.3.Variable CostsVariable Costs

4.4.Liquid costsLiquid costs

Income Statement

A financial report that provides information regarding the profit or loss for the last accounting period

1.1.Balance SheetBalance Sheet

2.2.General LedgerGeneral Ledger

3.3.Income StatementIncome Statement

4.4.Pro Forma financial statementPro Forma financial statement

General Ledger

A book that contains all the accounts of the business listed in numerical order low to high

1.1.General LedgerGeneral Ledger

2.2.Balance SheetBalance Sheet

3.3.General JournalGeneral Journal

4.4.Horizontal AnalysisHorizontal Analysis

General Journal

A book of chronological business transactions including a brief description of its purpose and account number. Transactions are first recorded here

1.1.General LedgerGeneral Ledger

2.2.Balance SheetBalance Sheet

3.3.General JournalGeneral Journal

4.4.Horizontal AnalysisHorizontal Analysis

Cash Flow Statement

Provides information about a company’s inflow and outflow of money

1.1.Income StatementIncome Statement

2.2.Cash Flow StatementCash Flow Statement

3.3.Pro Forma StatementPro Forma Statement

4.4.Income StatementIncome Statement

Pro Forma Statement

A forward looking document created when setting a budget – used for establish the projected financial activity for an upcoming accounting period

1.1.Income StatementIncome Statement

2.2.Cash Flow StatementCash Flow Statement

3.3.Pro Forma StatementPro Forma Statement

4.4.Income StatementIncome Statement

Current Liabilities

Debts and obligations that a company expects to pay within 12 months

1.1.ExpenseExpense

2.2.DepletionDepletion

3.3.Current LiabilitiesCurrent Liabilities

4.4.Break even pointBreak even point

Common Stock

The most common form of ownership in a business in which dividends are paid to common stockholders after all payments have been made on debts and to preferred stockholders

1.1.Preferred StockPreferred Stock

2.2.Common StockCommon Stock

3.3.Junk BondsJunk Bonds

4.4.Owner’s EquityOwner’s Equity

Liability

The amount of money a business owes a person or company for goods or services rendered

1.1.IOUIOU

2.2.Operating ExpensesOperating Expenses

3.3.DebitDebit

4.4.LiabilityLiability

Retained Earnings

Represents all earnings that a business has accumulated since its inception less any dividends it has paid

1.1.Retained EarningsRetained Earnings

2.2.Withdrawal AccountWithdrawal Account

3.3.Party fundParty fund

4.4.Capital StockCapital Stock

Asset

Everything of value owned and used in a business such as cash, sales, supplies

1.1.COGSCOGS

2.2.Capital StockCapital Stock

3.3.AssetAsset

4.4.LiquidityLiquidity

Owner’s Equity

Part of a business that belongs to the owner

1.1.Owners EquityOwners Equity

2.2.Capital StockCapital Stock

3.3.AssetAsset

4.4.Current AssetsCurrent Assets

Credit

The right side of any account that decreases assets and increases liabilities and owner’s equity

1.1.CreditCredit

2.2.DebitDebit

3.3.FootingFooting

4.4.TransactionTransaction

Financial Formulas to know

Mark’s little Finance portal

Working Capital

= Current Assets – Current Liabilities

1.1.Operating ProfitOperating Profit

2.2.DividendsDividends

3.3.Owner’s EquityOwner’s Equity

4.4.Working CapitalWorking Capital

Operating Income

= Gross Profit - Sales

1.1.Operating incomeOperating income

2.2.DividendsDividends

3.3.Gross profit on salesGross profit on sales

4.4.Owners EquityOwners Equity

Gross Profit on Sales

= Total Revenue - COGS

1.1.Operating incomeOperating income

2.2.DividendsDividends

3.3.Gross profit on salesGross profit on sales

4.4.Owners EquityOwners Equity

Current Ratio

= Current Assets/Current Liabilities

1.1.Current RatioCurrent Ratio

2.2.Leverage RatioLeverage Ratio

3.3.Accounting EquationAccounting Equation

4.4.Profit MarginProfit Margin

Debt to Assets Ratio

= Total Liabilities/Total Assets

1.1.EBITEBIT

2.2.Liquidity RatioLiquidity Ratio

3.3.Debt to Assets RatioDebt to Assets Ratio

4.4.Retained EarningsRetained Earnings

EBIT: Earnings Before Interest and Taxes

= Sales – COGS – Operating Expenses + Dividends + Interest

1.1.Capital StockCapital Stock

2.2.EBITEBIT

3.3.Long Term LiabilitiesLong Term Liabilities

4.4.Net LossNet Loss

Accounting Equation

= Liabilities + Owner’s Equity

1.1.Accounting EquationAccounting Equation

2.2.Current AssetsCurrent Assets

3.3.Owner’s EquityOwner’s Equity

4.4.Operating IncomeOperating Income

COGS: Cost of Goods Sold

= Beginning Inventory + purchases to inventory – ending inventory

1.1.Inventory TurnoverInventory Turnover

2.2.EBITEBIT

3.3.COGSCOGS

4.4.Current AssetsCurrent Assets

Net Operating Margin

= Operating Profit/Sales

1.1.Inventory TurnoverInventory Turnover

2.2.Profit Margin on SalesProfit Margin on Sales

3.3.Owner’s EquityOwner’s Equity

4.4.Net Operating MarginNet Operating Margin

Profit Margin on Sales

= Net Profit/Sales

1.1.Inventory TurnoverInventory Turnover

2.2.Profit Margin on SalesProfit Margin on Sales

3.3.Owner’s EquityOwner’s Equity

4.4.Net Operating MarginNet Operating Margin