Foundations of Accounting for Peregrine
Global Services
Financial statements - ANS- provide information that is useful for making investments
and other economic decisions about business
Horizontal analysis - ANS- Analysis of percentage increases and decreases in financial
statements across time.
The amount of each line item on the most recent statement is compared with the related
item on earlier statements, and expressed as a percentage change
Vertical analysis - ANS- An percentage analysis that is used to show the relationship of
each component to the total within a single statement.
The balance sheet is analyzed by stating each asset item as a percent of total assets.
Each liability and stockholders equity item is stated as a percent of total liabilities and
stockholders equity.
Common side statements - ANS- Horizontal and vertical analyses are useful in assessing
trends, in relationships and financial conditions, and operations of a business
Common size income statements - ANS- can compare to businesses or more
Solvency and profitability - ANS- The ability of a business to repay its debts and earn
income
Solvency analysis - ANS- Focuses on the ability of a business to pay, or otherwise
satisfy its current and noncurrent liabilities
Current position analysis, working capital - ANS- Using metrics to assess a business, is
ability to pay its current liabilities
Current ratio - ANS- current assets divided by current liabilities
Quick ratio - ANS- quick assets/current liabilities
Accounts Receivable analysis - ANS- sales on account increase accounts receivable,
whereas collections from customers decrease accounts receivable. It is desirable to
collect receivables as promptly as possible. The cash generated by prompt collections
, from customers may be used to pay or avoid current liabilities and be used in operations
for purposes, such as purchasing merchandise in large quantities at lower prices.
Accounts Receivable Turnover Ratio - ANS- net credit sales/average net accounts
receivable
number of days' sales in receivables - ANS- Average Accounts Receivable / Average
Daily Sales
Inventory turnover ratio - ANS- cost of goods sold/average inventory
Ratio fixed assets to long-term liabilities - ANS- ratio of fixed assets to long-term
liabilities is a solvency measure that indicates the margin of safety for node holders and
bond holders. It also indicates the ability of a business to borrow additional funds on a
long-term basis.
Ratio of liabilities to stockholders equity - ANS- Claims against the total assets of a
business are divided into two groups, one claims of creditors and two claims of owners.
The relationship between the total claims of the creditors and owners is a solvency
measure that indicates the margin of safety for creditors.
Time Interest Earned - ANS- The higher, the ratio, the lower, the risk that interest
payments will not be made, if earnings decrease. Dividing the sum of the income before
taxes and interest expense.
Profitability and market analysis - ANS- Profitability analysis focuses, primarily on the
relationship between operating results as reported in the income, statement and
resources available to the business as reported on the balance sheet. Market analysis
focuses on how well a company is doing from the financial markets perspective.
Return on Sales - ANS- The ratio of net income to net sales is a profitability measure that
is often called the net profit margin. The ratio shows how much of each dollar and sales
flows through the net income after all expenses are subtracted.
Return on Assets Ratio - ANS- The return on assets is computed by adding interest,
expense to net income, and dividing the sum by the average total assets.
Return on stockholders equity - ANS- Dividing net income by average total stockholders
equity
Leverage - ANS- Difference in the rate of return on stockholders equity, and the rate of
return on assets.
Global Services
Financial statements - ANS- provide information that is useful for making investments
and other economic decisions about business
Horizontal analysis - ANS- Analysis of percentage increases and decreases in financial
statements across time.
The amount of each line item on the most recent statement is compared with the related
item on earlier statements, and expressed as a percentage change
Vertical analysis - ANS- An percentage analysis that is used to show the relationship of
each component to the total within a single statement.
The balance sheet is analyzed by stating each asset item as a percent of total assets.
Each liability and stockholders equity item is stated as a percent of total liabilities and
stockholders equity.
Common side statements - ANS- Horizontal and vertical analyses are useful in assessing
trends, in relationships and financial conditions, and operations of a business
Common size income statements - ANS- can compare to businesses or more
Solvency and profitability - ANS- The ability of a business to repay its debts and earn
income
Solvency analysis - ANS- Focuses on the ability of a business to pay, or otherwise
satisfy its current and noncurrent liabilities
Current position analysis, working capital - ANS- Using metrics to assess a business, is
ability to pay its current liabilities
Current ratio - ANS- current assets divided by current liabilities
Quick ratio - ANS- quick assets/current liabilities
Accounts Receivable analysis - ANS- sales on account increase accounts receivable,
whereas collections from customers decrease accounts receivable. It is desirable to
collect receivables as promptly as possible. The cash generated by prompt collections
, from customers may be used to pay or avoid current liabilities and be used in operations
for purposes, such as purchasing merchandise in large quantities at lower prices.
Accounts Receivable Turnover Ratio - ANS- net credit sales/average net accounts
receivable
number of days' sales in receivables - ANS- Average Accounts Receivable / Average
Daily Sales
Inventory turnover ratio - ANS- cost of goods sold/average inventory
Ratio fixed assets to long-term liabilities - ANS- ratio of fixed assets to long-term
liabilities is a solvency measure that indicates the margin of safety for node holders and
bond holders. It also indicates the ability of a business to borrow additional funds on a
long-term basis.
Ratio of liabilities to stockholders equity - ANS- Claims against the total assets of a
business are divided into two groups, one claims of creditors and two claims of owners.
The relationship between the total claims of the creditors and owners is a solvency
measure that indicates the margin of safety for creditors.
Time Interest Earned - ANS- The higher, the ratio, the lower, the risk that interest
payments will not be made, if earnings decrease. Dividing the sum of the income before
taxes and interest expense.
Profitability and market analysis - ANS- Profitability analysis focuses, primarily on the
relationship between operating results as reported in the income, statement and
resources available to the business as reported on the balance sheet. Market analysis
focuses on how well a company is doing from the financial markets perspective.
Return on Sales - ANS- The ratio of net income to net sales is a profitability measure that
is often called the net profit margin. The ratio shows how much of each dollar and sales
flows through the net income after all expenses are subtracted.
Return on Assets Ratio - ANS- The return on assets is computed by adding interest,
expense to net income, and dividing the sum by the average total assets.
Return on stockholders equity - ANS- Dividing net income by average total stockholders
equity
Leverage - ANS- Difference in the rate of return on stockholders equity, and the rate of
return on assets.
