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  1. Transactions that affect RE

    • NI
    • Cash dividend and stock dividend

  2. Transactions that affect CC

    • Stock issuance
    • Stock dividend

  3. Transactions that affect SE

    • Change in re
    • Change In cc
    • Treasury stock purchase and resale

  4. Transactions that affect Capital in excess of par

    • Stock issuance
    • Stock dividend(<20-25%)
    • Treasury stock sales

  5. What affects EPS/how to manipulate EPS

    • Treasury stock purchase and sales
    • Additional common stock ISSUED

  6. Pros and cons of preferred stock

    • No dilution effect
    • Raise capital

  7. LIFO and FIFO

    • LIFO: lower tax; value end ivt at less than replacement cost; attractive in industries where cost increases and ivt is large
    • FIFO: represent the ivt’s true replacement cost; less complex

  8. Bonds and stocks(common and preferred)

    • fixed payment date, inflexibility, bankruptcy; cash flow
    • stockholders remain in control
    • interest payment deducted for income tax purpose

  9. pros and cons for purchasing treasury stock

    • stock option; compensation for employees
    • arbitrage
    • boost EPS
    • support market price of stock
    • control over the ownership
    • lower liquidity

  10. Capital acquisition ratio

    Ability to finance with CFO, do not need external financing for expansion

  11. Quality of income ratio

    • Stronggood cash flow management
    • Seasonal variation and purchase of ivt cause fluctuation
    • Growing sales, AR and ivt increases faster than AP, CFO drops, less than NI, ratio decrease
    • Recognize revenuedecrease; recognize expenseincrease

  12. Free cash flow

    • CFO-dividend-capital expenditure(maintenance and dep of PPE)
    • Sufficiency of cash to pursue LT investment opportunities

  13. Ivt turnover ratio

    • Cogs/avg ivt
    • how often a company sells its inventory and replaces it in a time period.
    • A high turnover means that a business more than likely has very strong sales.
    • High ratio means ivt moves quickly, which reduce storage and obsolescence cost
    • ivt costing method

  14. Ivt turnover ratio

    • Cogs/avg AP
    • How quickly management pays trade accout
    • Whether suppliers are paid In timely manner
    • Ivt costing method
    • Sales R&A

  15. Fixed asset turnover ratio

    • Net sales/net fixed asset
    • Ability of managing fixed asset to generate revenue
    • Selling fixed asset;
    • Accelerated depreciation
    • Shortening estimated useful life of asset

  16. Quick ratio(liquidity: pay off its short-term debts and respond to cash needs.)

    • excludes inventories from current assets
    • ability to repay short-term liabilities with only its short-term assets
    • too high=inefficient use of resources

  17. D/E ratio

    • Mix of debt and SE in financing project
    • Treasury stock purchase decrease SE massively(par value vs purchase price), D/E increase
    • Low ratio, low debt low Investor and creditor riskexpose to less risk in terms in market rate increase

  18. Times interest earned ratio

    Sufficient earnings to cover interest expense on the strength of improved earnings

  19. Dividend yield

    • Low=companies reinvesting profit in operations
Card Set:
acct others
2013-05-27 06:15:26
acct others

acct others
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