Jessybrown

Accounting - The system of recording, reporting, and summarizing past financial information and transactions. Accounts Receivable Turnover (AR Turnover) - An activity ratio found by credit sales divided by accounts receivable. Activity Ratios - A category of ratios that measure how well a company uses its assets to generate sales or cash, showing the firm's operational efficiency and profitability. Additional Funds Needed (AFN) - Another name for the discretionary financing needed or exte...

A company called Bobby's Books is considering purchasing a new bookbinding machine. The company calculates the hurdle rate of the project to be 9% and the IRR to be 11%. Should the company purchase the bookbinding machine? No, because the old bookbinding machine still works. Yes, because the IRR exceeds the cost of capital. No, because the hurdle rate is lower than the IRR. Yes, because newer models of equipment are always profitable investments. - Yes, because the IRR exceeds the cost o...

AR Turnover - Is an activity/asset management ratio. Helps to identify how quickly these accounts receivables turn over during a given year. A rate of 12 indicated that the company is collecting once a month. If less or decreasing then it may indicate that the company is taking longer to collect. Credit Sales/Accounts Receivable Average Collection Period (ACP) - Is an activity ratio. Convert AR turnover into a day count measure. 365/AR Turnover Current Ratio - Is a liquidity ratio. Short-t...

Accounting Definition  The system of recording, reporting, and summarizing past financial information and transactions. Activity Ratios  A category of ratios that measure how well a company uses its assets to generate sales or cash, showing the firm’s operational efficiency and profitability.  AR Turnover: An activity ratio found by credit sales divided by accounts receivable.  ACP: An activity ratio found by the number of days in a year (365) divided by AR turnover.  F...

Accounting The system of recording, reporting, and summarizing past financial information and transactions. Accounts Receivable Turnover (AR Turnover) An activity ratio found by credit sales divided by accounts receivable. Activity Ratios A category of ratios that measure how well a company uses its assets to generate sales or cash, showing the firm's operational efficiency and profitability. Additional Funds Needed (AFN) Another name for the discretionary financing needed or external f...

agency problem - when the agency (management) doesn't act in the best interests of the principal (owners) APR - Annual percentage rate; the annual rate of interest that is charged for using credit coincident economic indicators - indicators that show the current state of the economy, used jointly with leading and lagging indicators compound interest - total interest = principal times (1+interest rate)^# of periods - principal examples of coincident economic indicators - GDP, personal inco...

In which way is accounting different from finance? Accounting is about budgeting, saving, and borrowing, while finance is about investing, forecasting, and lending. Accounting is focused on allocating capital, while finance is focused on bringing in capital. Accounting is backward looking, while finance is focused on the future. Accounting forecasts future performance, given the past, while finance records past performance. Accounting is backward looking, while finance is focused on the fu...

In which way is accounting different from finance? Accounting is backward looking, while finance is focused on the future. What is the main question that both individuals and companies must consider when making financial decisions to reach a goal? Will the benefits of the action outweigh the costs? A financial manager at a company is trying to determine whether to issue new stocks or new bonds to cover the costs of a project the company is doing the next year. Which main task in business ...

In which way is accounting different from finance? Accounting is backward looking, while finance is focused on the future. What is the main question that both individuals and companies must consider when making financial decisions to reach a goal? Will the benefits of the action outweigh the costs? A financial manager at a company is trying to determine whether to issue new stocks or new bonds to cover the costs of a project the company is doing the next year. Which main task in business ...

A company calculated variances of a budget and actual cash flows that indicate the firm's strengths and weaknesses in cash flows and its budgeting process. Which major use of cash budgeting is this an example of? - Performance evaluation A company currently has a ratio of 1.5 but hopes to improve the ratio to 2 to align more with the industry benchmark. To achieve this goal, costs were cut in production through an investment in efficient equipment, and the company achieved a higher profit ...