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Definition
| A balance sheet includes assets, liabilities, and owner's equity for a specific date, prepared once or twice a year |
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Definition
| A decrease in the general price level |
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Term
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Definition
| Anywhere goods and services exchange hands.Process of giving up something for gaining something else |
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Term
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Definition
| Combines elements of the command and market economies |
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Term
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Definition
Equals current assets/current liabilities
Represents assets that the business could convert into cash in < 1 year compared to liabilities that it must pay in < 1 year; shows ability of company to pay debts as they become due. Ideally, this ratio should be over 1.0.
Want to be high |
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Term
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Definition
Equals net profit/owner's equity
Indicates the rate of return the owners/stockholders are receiving on their investments. There is not an ideal ratio; however, it is used to compare with other types of investments to see if there may be another investment that is more desirable.
Want to be high |
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Term
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Definition
Equals total liabilities/owner's equity
Shows how much the business relies on money borrowed externally versus money from within the business. Ideally, this ratio should be less than 2.0.
Want to be low |
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Term
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Definition
Equals total sales/net income
Shows the amount of sales needed for each dollar of net income. While there is not an ideal ratio, managers use this number to compare to past periods to determine how changes in sales affect net income.
You want it to be high |
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Term
| Financial Performance Ratio |
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Definition
| Financial performance ratios are comparisons using a company's financial data to determine how well a business is performing. |
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Term
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Definition
| Financial planning includes determining the amount of money needed to start and operate the business until a profit is made. Also the major sales and expenses are determined. |
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Definition
| Financial planning includes determining whether enough money is made to cover growth opportunities |
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Term
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Definition
| Financial planning includes determining whether they are making enough money to operate. The basic formula used is Revenue- Expenses = Profit or Loss. |
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Term
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Definition
| Financial statements provide a picture of the financial performance of a business. |
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Definition
| Right to purchase, use, and discard of things of value |
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Term
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Definition
| a budget for current expenses as distinct from financial transactions or permanent improvements |
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Definition
| a financial statement that gives operating results for a specific period |
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Term
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Definition
| plans income and expenses from the beginning of a new business or a major business expansion until it becomes profitable |
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Term
| Owner's (or Shareholder's) Equity |
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Definition
| Value of the owner's investment in the business. (How much capital has the owner put into the business) |
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Term
| Financial Institutions and Economic |
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Definition
| Activity banking services are commonly used for many things such as buy goods, building homes,pave streets, hospitals, etc. Deposits do not remain idle in bank vaults they are loaned to businesses and individuals. |
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Term
| Federal Reserve Activities |
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Definition
| Banks cannot lend all of the money they receive from their customers. Must keep certain amount of money on hand for customers who need cash. |
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Term
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Definition
| Set up by the government to supervise and regulate member banks in order to help the banks serve the public efficiently. All national banks must join and state banks may join. Banks that join called member banks. |
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