| accounting earnings | Earnings of a firm as reported on its income statement.
|
 |
|
|
| acid test ratio | See quick ratio.
|
|
|
|
| asset turnover | The annual sales generated by each dollar of assets (sales/assets).
|
|
|
|
| average collection period | The ratio of accounts receivable to sales, or the total amount of credit extended per dollar of daily sales (average AR/sales 3 × 365).
|
|
|
|
| balance sheet | An accounting statement of a firm's financial position at a specified time.
|
|
|
|
| current ratio | A ratio representing the ability of the firm to pay off its current liabilities by liquidating current assets (current assets/current liabilities).
|
|
|
|
| days receivables | See average collection period.
|
|
|
|
| Du Pont system | Decomposition of firm profitabilitymeasures into the underlying factors that determine such profitability.
|
|
|
|
| earnings yield | The ratio of earnings to price, E/P.
|
|
|
|
| economic earnings | The real flow of cash that a firm could pay out forever in the absence of any change in the firm's productive capacity.
|
|
|
|
| economic value added | The spread between ROA and cost of capital multiplied by the capital invested in the firm. It measures the dollar value of the firm's return in excess of its opportunity cost.
|
|
|
|
| FIFO | The first-in first-out accounting method of inventory valuation.
|
|
|
|
| income statement | A financial statement showing a firm's revenues and expenses during a specified period.
|
|
|
|
| interest coverage ratio | A financial leverage measure (EBIT divided by interest expense).
|
|
|
|
| leverage ratio | Ratio of debt to total capitalization of a firm.
|
|
|
|
| LIFO | The last-in first-out accounting method of valuing inventories.
|
|
|
|
| market–book-value ratio | Ratio of price per share to book value per share.
|
|
|
|
| price–earnings ratio | The ratio of a stock's price to its earnings per share. Also referred to as the P/E multiple.
|
|
|
|
| profit margin | See return on sales.
|
|
|
|
| quality of earnings | The realism and conservatism of the earnings number and the extent to which we might expect the reported level of earnings to be sustained.
|
|
|
|
| quick ratio | A measure of liquidity similar to the current ratio except for exclusion of inventories (cash plus receivables divided by current liabilities).
|
|
|
|
| residual income | See economic value added (EVA).
|
|
|
|
| return on assets | A profitability ratio; earnings before interest and taxes divided by total assets.
|
|
|
|
| return on equity | An accounting ratio of net profits divided by equity.
|
|
|
|
| return on sales | The ratio ofoperating profits per dollar of sales (EBIT divided by sales).
|
|
|
|
| statement of cash flows | A financial statement showing a firm's cash receipts and cash payments during a specified period.
|
|
|
|
| times interest earned | Ratio of profits to interest expense.
|