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1. 2.
annual report balance sheet

3. 4.
market values common size balance sheet

5. 6.
book values retained earnings

7. 8.
stockholders’ equity Operating cash flows

9. 10.
income statement accounting profits

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1.
2. A report issued by a corporation to its
A statement that shows the firm’s financial stockholders that contains basic financial
position—assets and liabilities and equity—at a statements as well as the opinions of
specific point in time. management about the past year’s operations
and the firm’s future prospects.

4. 3.
Dollar amounts on the balance sheet are stated Values of items—such as assets, liabilities, and
as percentages of total assets. equities—in the marketplace outside the firm.

6.
5.
The amount of the firm’s earnings that has been
Amounts reported in financial statements—
reinvested in the firm rather than paid out as
accounting numbers.
dividends.

8. 7.
Those cash flows that arise from normal The funds provided by common stockholders—
operations; the difference between cash common stock, paid-in capital, and retained
collections and cash expenses associated with earnings; equals total assets minus total
the manufacture and sale of inventory. liabilities.

9.
10.
A statement summarizing the firm’s revenues
A firm’s net income as reported on its income
and expenses over an accounting period,
statement.
generally one quarter or one year.

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11. 12.
statement of cash flows Financial leverage

13. 14.
liquidity ratios Asset management ratios

15. 16.
statement of retained earnings liquid asset

17. 18.
debt management ratios profitability ratios

19. 20.
market value ratios comparative ratio analysis

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11.
12. A statement that reports the effects of a firm’s
The use of debt financing. operating, investing, and financing activities on
cash flows over an accounting period.

13.
14. Ratios that show the relationship of a firm’s cash
A set of ratios that measures how effectively a and other current assets to its current liabilities;
firm is managing its assets. they provide an indication of the firm’s ability to
meet its current obligations.

15.
A statement reporting the change in the firm’s
16.
retained earnings as a result of the income
An asset that can be easily converted into cash
generated and retained during the year. The
without significant loss of the amount originally
balance sheet figure for retained earnings is the
invested.
sum of the earnings retained for each year the
firm has been in business.

18. 17.
A group of ratios showing the effect of liquidity, Ratios that provide an indication of how much
asset management, and debt management on debt the firm has and whether the firm can take
operating results. on more debt.

20.
19.
An analysis based on a comparison of a firm’s
A set of ratios that relate the firm’s stock price to
ratios with those of other firms in the same
its earnings and book value per share.
industry at the same point in time.

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21. 22.
trend analysis stockholders’ equity (net worth)

23.
window-dressing techniques

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22.
21.
The funds provided by common stockholders—
An evaluation of changes (trends) in a firm’s
common stock, paid-in capital, and retained
financial position over a period of time, perhaps
earnings; equals total assets minus total
five years.
liabilities.

23.
Techniques employed by firms to make their
financial statements look better than they
actually are.

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