Common-size financial statement | Statement that expresses each amount as a percent of a base amount. In the balance sheet, total assets is usually the base and is expressed as 100%. In the income statement, net sales is usually the base.
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Comparative financial statements | Statement with data for two or more successive periods placed in side-by-side columns, often with changes shown in dollar amounts and percents.
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Efficiency | Company's productivity in using its assets; usually measured relative to how much revenue a certain level of assets generates.
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Equity ratio | Portion of total assets provided by equity, computed as total equity divided by total assets.
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Financial reporting | Process of communicating information relevant to investors, creditors, and others in making investment, credit, and business decisions.
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Financial statement analysis | Application of analytical tools to general-purpose financial statements and related data for making business decisions.
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General-purpose financial statements | Statements published periodically for use by a variety of interested parties; includes the income statement, balance sheet, statement of shareholder's equity (or statement of retained earnings for a corporation), statement of cash flows, and notes to these statements.
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Horizontal analysis | Comparison of a company's financial condition and performance across time.
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Liquidity | Availability of resources to meet short-term cash requirements.
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Market prospects | Expectations (both good and bad) about a company's future performance as assessed by users and other interested parties.
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Profitability | Company's ability to generate an adequate return on invested capital.
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Ratio analysis | Determination of key relations between financial statement items as reflected in numerical measures.
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Solvency | Company's long-run financial viability and its ability to cover long-term obligations.
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Vertical analysis | Evaluation of each financial statement item or group of items in terms of a specific base amount.
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Working capital | Current assets minus current liabilities at a point in time.
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