MGT 11A Chapter Notes - Chapter 2: Accounting Equation, Retained Earnings, Common Stock
Document Summary
Intracompany = compare company results across 2+ periods. Guidelines (rule of thumb) = compare results to standards based on experience. 4 basic building blocks of (financial statement) analysis. Liquidity = ability to meet short-term obligations & generate revenues. Solvency = ability to generate future revenues & meet long-term obligations. Profitability = able to provide good financial rewards to get & keep financing. Profit margin ratio = net income/net sales. Market prospects = able to create pos. Price -to-earnings ratio = price per share/earnings per share. Account = record of increases & decreases in specific asset, liability, equity, revenue, or expense item. Items from account can be analyzed, summarized, presented in reports & financial statements. General ledger (ledger) = record containing all accounts used by a company, usually in electronic form. Asset accounts = are resources owned/controlled by company, these usually have expected future benefits. Cash = records all increases & decreases in cash.
