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Level 449

Horizontal & Vertical Lines


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horizontal line
y = b where b is the constant value where it crosses the y-axis. (All points on the line have the same y value which is b.)
Equation of the x-axis
Since it's a horizontal line, the equation for the x-axis is y = 0.
vertical line
Straight up and down line (height)
Equation of the y-axis
Since it's a vertical line, the equation for the y-axis is x = 0.
horizontal analysis
The study of percentage change in comparative statements is called:
Dollar Value Bias
The bias one sees from comparing numbers in absolute (dollars) rather than relative (percentage) terms.
Benchmarking
The practice of comparing a company with other leading companies.
What are the two types of benchmarking?
Benchmarking against a key competitor and benchmarking against the industry average.
What is the working capital ratio?
Working Capital= Current assets- Current liabilities
Working capital
What measures the ability to meet short-term obligations with current assets?
What is the current ratio formula?
Current Ratio= current assets/current liabilities. (Measures the ability to pay current liabilities with current assets)
What is the norm for a company's current ratio, as reported by the Risk Management Association?
1.5... A ratio of 1.85 is considered strong but keep in mind that a ratio too high such as 25 would indicate that the company is too liquid and not using its assets effectively.
acid-test ratio AKA quick ratio
Which ratio tells us whether the entity could pay all its current liabilities if they became due immediately?
What is the quick ratio?
Acid-test Ratio= Cash + Short-term investments + Net current receivables/ Current Liabilities (shows ability to pay all current liabilities if they became due immediately)
The inventory turnover ratio
Which ratio measure the number of times a company sells its agerage level of inventory during a year?
The accounts receivable turnover ratio.
Which ratio measures the ability to collect cash from credit customers?
Debt ratio
What is the relationship between total liabilities and total assets?
What does the return on sales ratio tell us?
It shows the percentage of each sales dollar earned as net income.
Return on Assets
s success in using assets to earn a profit?
Rate of return on common stockholders equity or return equity
Which ratio shows the relationship between net income and common stockholders equity?
What is the ROE formula?
ROE= Net income- preferred dividends/ average common stockholders equity (gauges how much income is earned for each dollar invested by the common shareholders)
Outstanding stock= Issued stock-treasury stock
What is the outstanding stock formula?
Price/earnings ratio
The ratio of the market price of a share of common stock to the company's earnings per share?
Dividend yield
The ratio of dividends per share to the stock's market price per share?
Horizontal analysis definition:
study of percentage changes in comparative financial statements
Vertical analysis definition:
Analysis of financial statement that reals the relationship of each statement item to a specific base, which is the 100% figure.
-f(x)
REFLECT about the X-AXIS
f(-x)
REFLECT about the Y-AXIS
c*f(x)
STRETCH VERTICALLY by a factor of c
f(cx)
COMPRESS HORIZONTALLY by a factor of c
(1/c)*f(x)
COMPRESS VERTICALLY by a factor of c
f(x/c)
STRETCH HORIZONTALLY by a factor of c
f(x)+c
SHIFT C units UPWARD
f(x)-c
SHIFT C units DOWNWARD
f(x-c)
SHIFT C units to the RIGHT
f(x+c)
SHIFT C units to the LEFT
y = 2
Horizontal Line through (4, 2)
y = ¼
Horizontal Line through (−2, ¼)
x = −1
Vertical Line through (−1, 6)
x = ¾
Vertical line through (¾, −3)
y = −½
Horizontal line through ( 3, −½)