| A | B |
|---|
| Common-Size Financial Statements | Statement that expresses each amount as a percent of a base amount. In the balance sheet, total assets is usually the base. In the income statement, net sales is usually the base. (p. 582) |
| Comparative Financial Statement | Statement with data for two or more successive periods placed in side-by-side columns, often with changes shwon in dollar amounts and percents. (p. 577) |
| Efficiency | Company's productivity in using its assets; usually measured relative to how much revenue a certain level of assets generates. (p. 574) |
| Equity Ratio | Portion of total assets provided by equity, computed as total equity divided by total assets. (p. 591) |
| Financial Reporting | Process of communicating information relevant to investors, creditors, and others in making investment, credit, and business decisions. (p. 575) |
| Financial Statement Analysis | Application of analytical tools to general-purpose financial statements and related data for making business decisions. (p. 574) |
| General-Purpose Financial Statements | Statements published periodically for use by a variety of interested parties; includes the income statement, balance sheet, statement of changes in equity (or statement of retained earnings), statement of cash flows, and notes to these statements. (p. 575) |
| Horizontal Analysis | Comparison of a company's financial condition and performance across time. (p. 576) |
| Market Prospects | Expectations (both good and bad) about a company's future performance as assessed by users and other interested parties. (p. 575) |
| Profitabality | Company's ability to generate an adequate return on invested capital. (p. 575) |
| Ratio Analysis | Determination of key relations between financial statement items. (p. 576) |
| Solvency | Company's long-run financial viability and its ability to cover long-term obligations. (p. 574) |
| Vertical Analysis | Evaluation of each financial statement item or group of items in terms of a specific base amount. (p. 576) |
| Working Capital | Current assets minus current liabilities. (p. 587) |
