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Current assets |
Assets that companies expect to convert to cash or use up within one year or the operating cycle, whichever is longer. |
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Current Liabilities |
Obligations that a company expects to pay within the next year or operating cycle, whichever is longer |
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Current Ratio |
A measure of liquidity computed as current assets divided by current liabilities. |
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FASB |
Financial Accounting Standards Board The primary accounting standard-setting body in the United States. |
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GAAP |
Generally accepted accounting principles (GAAP) A set of accounting standards that have substantial authoritative support, that guide accounting professionals. |
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IASB |
nternational Accounting Standards Board (IASB) An accounting standard-setting body that issues standards adopted by many countries outside of the United States. |
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IFRS |
International Financial Reporting Standards (IFRS) Accounting standards, issued by the IASB, that have been adopted by many countries outside of the United States. |
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PCAOB |
Public Company Accounting Oversight Board (PCAOB) The group charged with determining auditing standards and reviewing the performance of auditing firms. |
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SEC |
Securities and Exchange Commission (SEC) The agency of the U.S. government that oversees U.S. financial markets and accounting standard-setting bodies. |
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Ratio |
expresses the mathematical relationship between one quantity and another. Ratios shed light on company performance |
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Intracompany Comparisons |
covers two years for the same company |
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Industry Average Company Comparisons |
based on average ratios for particular industries |
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Inter Company Comparisons |
based on comparisons with a competitor in the same industry. |
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Profitability Ratio |
– measure the operating success of a company for a given period of time. EPS |
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Financial Reporting Enhancing Qualities |
Comparability, Consistency, Verifiable, and Timely |
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Financial Reporting Relevance |
Predictive, Confirmatory, Materiality |
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Financial Reporting Faithful Representation |
Complete, Neutral and Free from Error |
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Current Ratio Equation |
Current Assets / Current Liabilities |
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Working Capital |
Current Assets – Current Liabilities |
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EPS |
Net Income – Preferred Dividends / Average Common Shares Outstanding |
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Debt to Assets |
Total Liabilities / Total Assets |
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Free Cash Flow |
Net Cash Provided by Operations – Capital Exp. – Cash dividends |
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