Financial Management Flashcard resources for learning about Finance! This icon comes back here 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. Definitions Formulas

Debit The left side of any T account that increases assets and decreases liabilities and owners equity 1.C redit 2.D ebit 3.F ooting 4.T ransaction

Preferred Stock A form of capital stock that has certain preferences. Dividends are paid out on this first. 1.P referred Stock 2.C ommon Stock 3.J unk Bonds 4.O wner’s Equity

Depreciation The process of allocating the cost of a tangible asset over it’s useful life 1.L ong-term liabilities 2.A ctivity Ratios 3.F iscal Period 4.D epreciation

Dividend An Allocation of a company’s net income used for payment to the owners 1.O perating Profit 2.D ividends 3.O wner’s Equity 4.W orking Capital

Capital Stock Consists of investments that the owners of a business have made 1.O wners Equity 2.C apital Stock 3.A sset 4.C urrent Assets

Variable Cost Costs that change in relation to the level of activity within a company…sometime associated with number of units produced 1.P rofitability Ratios 2.C ost of Goods Sold 3.V ariable Costs 4.L iquid costs

Income Statement A financial report that provides information regarding the profit or loss for the last accounting period 1.B alance Sheet 2.G eneral Ledger 3.I ncome Statement 4.P ro Forma financial statement

General Ledger A book that contains all the accounts of the business listed in numerical order low to high 1.G eneral Ledger 2.B alance Sheet 3.G eneral Journal 4.H orizontal Analysis

General Journal A book of chronological business transactions including a brief description of its purpose and account number. Transactions are first recorded here 1.G eneral Ledger 2.B alance Sheet 3.G eneral Journal 4.H orizontal Analysis

Cash Flow Statement Provides information about a company’s inflow and outflow of money 1.I ncome Statement 2.C ash Flow Statement 3.P ro Forma Statement 4.I ncome Statement

Pro Forma Statement A forward looking document created when setting a budget – used for establish the projected financial activity for an upcoming accounting period 1.I ncome Statement 2.C ash Flow Statement 3.P ro Forma Statement 4.I ncome Statement

Current Liabilities Debts and obligations that a company expects to pay within 12 months 1.E xpense 2.D epletion 3.C urrent Liabilities 4.B reak even point

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 1.P referred Stock 2.C ommon Stock 3.J unk Bonds 4.O wner’s Equity

Liability The amount of money a business owes a person or company for goods or services rendered 1.I OU 2.O perating Expenses 3.D ebit 4.L iability

Retained Earnings Represents all earnings that a business has accumulated since its inception less any dividends it has paid 1.R etained Earnings 2.W ithdrawal Account 3.P arty fund 4.C apital Stock

Asset Everything of value owned and used in a business such as cash, sales, supplies 1.C OGS 2.C apital Stock 3.A sset 4.L iquidity

Owner’s Equity Part of a business that belongs to the owner 1.O wners Equity 2.C apital Stock 3.A sset 4.C urrent Assets

Credit The right side of any account that decreases assets and increases liabilities and owner’s equity 1.C redit 2.D ebit 3.F ooting 4.T ransaction

Financial Formulas to know Mark’s little Finance portal

Working Capital = Current Assets – Current Liabilities 1.O perating Profit 2.D ividends 3.O wner’s Equity 4.W orking Capital

Operating Income = Gross Profit - Sales 1.O perating income 2.D ividends 3.G ross profit on sales 4.O wners Equity

Gross Profit on Sales = Total Revenue - COGS 1.O perating income 2.D ividends 3.G ross profit on sales 4.O wners Equity

Current Ratio = Current Assets/Current Liabilities 1.C urrent Ratio 2.L everage Ratio 3.A ccounting Equation 4.P rofit Margin

Debt to Assets Ratio = Total Liabilities/Total Assets 1.E BIT 2.L iquidity Ratio 3.D ebt to Assets Ratio 4.R etained Earnings

EBIT : Earnings Before Interest and Taxes = Sales – COGS – Operating Expenses + Dividends + Interest 1.C apital Stock 2.E BIT 3.L ong Term Liabilities 4.N et Loss

Accounting Equation = Liabilities + Owner’s Equity 1.A ccounting Equation 2.C urrent Assets 3.O wner’s Equity 4.O perating Income

COGS : Cost of Goods Sold = Beginning Inventory + purchases to inventory – ending inventory 1.I nventory Turnover 2.E BIT 3.C OGS 4.C urrent Assets

Net Operating Margin = Operating Profit/Sales 1.I nventory Turnover 2.P rofit Margin on Sales 3.O wner’s Equity 4.N et Operating Margin

Profit Margin on Sales = Net Profit/Sales 1.I nventory Turnover 2.P rofit Margin on Sales 3.O wner’s Equity 4.N et Operating Margin