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Acid-est ratio
cash, current investments, and accounts receivable divided by current liabilities; measures the availability of liquid current assets to pay current liabilities TERM 2
Aggressive accounting
practices
DEFINITION 2 practices that result in reporting higher income, higher assets, and lower liabilities TERM 3
Asset turnover
DEFINITION 3 net sales divided by average total assets, which measures the sales per dollar assets invested TERM 4
Average collection period
DEFINITION 4 Approximate number of days the average accounts receivable balance is outstanding. It equals 365 divided by the receivables turnover ratio. TERM 5
Average days in inventory
DEFINITION 5 Approximate number of days the average inventory is held. It equals 365 days divided by the inventory turnover ratio
Conservative accounting
practices
practices that result in reporting lower income, lower assets, and high liabilities TERM 7
Current ratio
DEFINITION 7 Current assets divided by current liabilities; measures the availability of current assets to pay current liabilities TERM 8
Debt to equity ratio
DEFINITION 8 Total liabilities divided by stockholders' equity; measure a company's solvency risk TERM 9
Discontinued operation
DEFINITION 9 the sale or disposal of a significatnt component of a company's operations TERM 10
Extraordinary item
DEFINITION 10 An event that is 1. Unusual in nature and 2. Infrequent in occurrence
Price-earnings (PE) ratio
compares a company's share price with its earnings per share TERM 17
Profit margin
DEFINITION 17 Net income divided by net sales; indicates the earnings per dollar of sales TERM 18
Profitability ratios
DEFINITION 18 measure the earning or operating effectiveness of a company TERM 19
quality of
earnings
DEFINITION 19 refers to the ability of reported earnings to reflect the company's true earnings, as well as the usefulness of reported earnings to predict future earnings TERM 20
receivables turnover ratio
DEFINITION 20 net credit sales divided by average accounts receivables; the number of times during a year that the average accounts receivable balance is collected
return on assets
net income divided by average total assets; measures the amount of net income generated for each dollar invested in assets TERM 22
return on equity
DEFINITION 22 net income divided by average stockholders' equity; measures the income generated per dollar of equity TERM 23
Solvency
DEFINITION 23 Refers to a company's ability to pay its long-term liabilities TERM 24
times interest earned ratio
DEFINITION 24 ratio that compares interest expense with income available to pay those TERM 25
value stocks
DEFINITION 25 have lower share prices in relationship to their fundamental ratios and therefore trade at lower PE ratios
