| A | B |
|---|
| Asset | Economic resources that have probable future benefits to the company |
| Liabilities | Probable future sacrifices of economic resources |
| Stockholders' Equity | Financing provided by owners and operations |
| Revenue | Increase in assets or settlement of liabilities from ongoing operations |
| Expense | Decrease in assets or increase in liabilities from ongoing operations |
| Gain | Increase in assets or settlement of liabilities from peripheral activities |
| Loss | Decrease in assets or increase in liabilities from peripheral activities |
| Financial Leverage Ratio=? | [Average Total Assets] / [Average Stockholders' Equity] } When we are performing ratio analysis, we compute the AVERAGE AMOUNTS by taking the [BEGINNING BALANCE + ENDING BALANCE] / 2 |
| Financial Leverage Ratio | Ratio tells us how well management is using debt to increase assets the company employs to earn income |
| Statement of Cash Flows: Investing Activities | Involves the purchase or sale of long-term productive assets, the lending of monies to others, and receiving principal payments back from those loans |
| When we purchase a long-term productive asset... | It's a cash OUTFLOW |
| When we sell a productive asset... | It's a cash INFLOW |
| When we loan funds to others... | It's a cash OUTFLOW |
| When we receive principal payments on those loans... | It's a cash INFLOW |
| Financing Activities | Involve borrow and repaying amounts from financial institutions and the sale or repurchase of the company's stock |
| The payment of a cash dividend is... | A financing activity |
| When we borrow money from a financial institution... | Its a cash INFLOW |
| Repaying the principal amount is... | Is a cash OUTFLOW |
| When the company sells stock... | It's a cash INFLOW |
| If the company repurchases its own stock... | It's a cash OUTFLOW |
| The payment of cash dividends... | Is ALWAYS a cash OUTFLOW |
| Profit Margin %=? | [Profit Margin] / [Total Sales] |
