Financial Management Flashcard resources for learning about Finance!

1. Note: the information in these slides was compiled from the New Horizons student workbook. These slides are intended to be used only in conjunction with the class or those who posses both books. These slide should not be copied elsewhere or sold. Financial ManagementFlashcard resources for learning about Finance! Definitions Formulas This icon comes back here

2. Debit The left side of any T account that increases assets and decreases liabilities and owners equity • Credit • Debit • Footing • Transaction

3. Preferred Stock A form of capital stock that has certain preferences. Dividends are paid out on this first. • Preferred Stock • Common Stock • Junk Bonds • Owner’s Equity

4. Depreciation The process of allocating the cost of a tangible asset over it’s useful life • Long-term liabilities • Activity Ratios • Fiscal Period • Depreciation

5. Dividend An Allocation of a company’s net income used for payment to the owners • Operating Profit • Dividends • Owner’s Equity • Working Capital

6. Capital Stock Consists of investments that the owners of a business have made • Owners Equity • Capital Stock • Asset • Current Assets

7. Variable Cost Costs that change in relation to the level of activity within a company…sometime associated with number of units produced • Profitability Ratios • Cost of Goods Sold • Variable Costs • Liquid costs

8. Income Statement A financial report that provides information regarding the profit or loss for the last accounting period • Balance Sheet • General Ledger • Income Statement • Pro Forma financial statement

9. General Ledger A book that contains all the accounts of the business listed in numerical order low to high • General Ledger • Balance Sheet • General Journal • Horizontal Analysis

10. General Journal A book of chronological business transactions including a brief description of its purpose and account number. Transactions are first recorded here • General Ledger • Balance Sheet • General Journal • Horizontal Analysis

11. Cash Flow Statement Provides information about a company’s inflow and outflow of money • Income Statement • Cash Flow Statement • Pro Forma Statement • Income Statement

12. Pro Forma Statement A forward looking document created when setting a budget – used for establish the projected financial activity for an upcoming accounting period • Income Statement • Cash Flow Statement • Pro Forma Statement • Income Statement

13. Current Liabilities Debts and obligations that a company expects to pay within 12 months • Expense • Depletion • Current Liabilities • Break even point

14. Common Stock The most common form of ownership in a business in which dividends are paid to common stockholders after all payments have been made on debts and to preferred stockholders • Preferred Stock • Common Stock • Junk Bonds • Owner’s Equity

15. Liability The amount of money a business owes a person or company for goods or services rendered • IOU • Operating Expenses • Debit • Liability

16. Retained Earnings Represents all earnings that a business has accumulated since its inception less any dividends it has paid • Retained Earnings • Withdrawal Account • Party fund • Capital Stock

17. Asset Everything of value owned and used in a business such as cash, sales, supplies • COGS • Capital Stock • Asset • Liquidity

18. Owner’s Equity Part of a business that belongs to the owner • Owners Equity • Capital Stock • Asset • Current Assets

19. Credit The right side of any account that decreases assets and increases liabilities and owner’s equity • Credit • Debit • Footing • Transaction

20. Financial Formulas to know Mark’s little Finance portal

21. Working Capital = Current Assets – Current Liabilities • Operating Profit • Dividends • Owner’s Equity • Working Capital

22. Operating Income = Gross Profit - Sales • Operating income • Dividends • Gross profit on sales • Owners Equity

23. Gross Profit on Sales = Total Revenue - COGS • Operating income • Dividends • Gross profit on sales • Owners Equity

24. Current Ratio = Current Assets/Current Liabilities • Current Ratio • Leverage Ratio • Accounting Equation • Profit Margin

25. Debt to Assets Ratio = Total Liabilities/Total Assets • EBIT • Liquidity Ratio • Debt to Assets Ratio • Retained Earnings

26. EBIT: Earnings Before Interest and Taxes = Sales – COGS – Operating Expenses + Dividends + Interest • Capital Stock • EBIT • Long Term Liabilities • Net Loss

27. Accounting Equation = Liabilities + Owner’s Equity • Accounting Equation • Current Assets • Owner’s Equity • Operating Income

28. COGS: Cost of Goods Sold = Beginning Inventory + purchases to inventory – ending inventory • Inventory Turnover • EBIT • COGS • Current Assets

29. Net Operating Margin = Operating Profit/Sales • Inventory Turnover • Profit Margin on Sales • Owner’s Equity • Net Operating Margin

30. Profit Margin on Sales = Net Profit/Sales • Inventory Turnover • Profit Margin on Sales • Owner’s Equity • Net Operating Margin