Also called the quick ratio, the ratio of current assets minus inventories, accruals, and prepaid items to current liabilities.
any item whose ownership can be claimed by the company that has monetary value. This may include intangibles such as intellectual property.
Also called the statement of financial condition, it is a summary of a company's assets, liabilities, and owners' equity.
Value of cash, accounts receivable, inventories, marketable securities and other assets that could be converted to cash in less than 1 year.
Indicator of short-term debt-paying ability. Determined by dividing current assets by current liabilities.
Amount owed for salaries, interest, accounts payable and other debts due within 1 year.
A non-cash expense (also known as non-cash charge) that provides a source of free cash flow. Amount allocated during the period to amortize the cost of acquiring long-term assets over the useful life of the assets. The sum of depreciation expenses of prior years leads to the balance sheet item Accumulated Depreciation.
Long-lived property owned by a firm that is used by a firm in the production of its income. Tangible fixed assets include real estate, plant, and equipment. Intangible fixed assets include patents, trademarks, and customer recognition.
A cost that is fixed in total for a given period of time and for given production levels.
a projection about future performance on the basis of historical and current conditions data.
Use of debt to increase the expected return on equity. Financial leverage is measured by the ratio of debt to debt plus equity.
Excess of purchase price over fair market value of net assets acquired under the purchase method of accounting.
calculated by taking the sales minus the cost of goods sold.
Initial public offering (IPO)
A company's first sale of stock to the public. Letters of guarantee - A letter from a bank to a brokerage firm which states that a customer (who has written a call option) does indeed own the underlying stock and the bank will guarantee delivery if the call is assigned. Thus the call can be considered covered. Not all brokerage firms accept letters of guarantee. Also: letter issued to Option Clearing Corporation by member firms covering a guarantee of any trades made by one of its customers, (a trader or broker on the exchange floor).
A financial obligation, or the cash outlay that must be made at a specific time to satisfy the contractual terms of such an obligation.
a ratio that measure a firm's ability to meet its short-term financial obligations on time, such as the ratio of current assets to current liabilities.
Net assets (total net assets)
The difference between total assets and current liabilities, and non-capitalized long-term liabilities.
Net current assets
The difference between current assets and current liabilities, also known as working capital.
Price per earnings ratio
Current stock price divided by trailing annual earnings per share or expected annual earnings per share.
see Acid Test.
Return on capital employed
Indicator of profitability of the firm's capital investments. Determined by dividing Earnings Before Interest and Taxes by (capital employed plus short-term loans minus intangible assets).
A cost that is directly proportional to the volume of output produced. When production is zero, the variable cost is equal to zero.
Defined as the difference between current assets and current liabilities. There are some variations in how working capital is calculated. Variations include the treatment of short-term debt. In addition, current assets may or may not include cash and cash equivalents, depending on the company.
Select definitions are sourced from the Bloomberg Financial Glossary