2. Financial Statements and Ratios | Exercises and Flashcards

2. Financial Statements and Ratios, English for Accounting Exercises and Flashcards

Wordlist for 2. Financial Statements and Ratios, English for Accounting

Word	Example
financial statement	The company's financial statement provides a clear view of its performance
balance sheet	The balance sheet lists assets, liabilities, and equity
income statement	The income statement summarizes revenue and expenses
cash flow statement	The cash flow statement shows cash inflows and outflows
statement of retained earnings	The statement of retained earnings explains profit distribution
assets	Assets include cash, investments, and property
liabilities	The company's liabilities include loans and accounts payable
equity	Equity represents ownership interest in a company
revenue	The company reported an increase in revenue
expenses	Reducing expenses can improve profitability
gross profit	Gross profit is calculated as revenue minus cost of goods sold
net income	The company's net income exceeded expectations
operating income	Operating income reflects profit from core activities
earnings per share	Earnings per share is a key metric for investors
debt-to-equity ratio	A high debt-to-equity ratio may indicate financial risk
return on investment	The return on investment measures profitability
liquidity ratio	The liquidity ratio helps assess a company's short-term financial health
quick ratio	A quick ratio above 1 indicates strong liquidity
current ratio	The current ratio compares current assets to liabilities
profit margin	Profit margin shows how much profit is made per dollar of revenue
return on assets	A higher return on assets indicates efficient use of resources
return on equity	Return on equity measures profitability for shareholders
working capital	Working capital is calculated as current assets minus current liabilities
fixed assets turnover	Fixed assets turnover measures how effectively a company uses fixed assets
inventory turnover	High inventory turnover indicates efficient inventory management
interest coverage ratio	Interest coverage ratio assesses a company's ability to pay interest
price-to-earnings ratio	A low price-to-earnings ratio may indicate an undervalued stock
dividend yield	Investors analyze dividend yield for income potential
market capitalization	Market capitalization represents the total value of a company's shares
gross margin	A high gross margin indicates strong pricing power
net profit margin	Net profit margin shows the percentage of revenue that remains as profit
operating margin	A strong operating margin indicates efficient operations
leverage ratio	A high leverage ratio suggests reliance on debt
financial leverage	Financial leverage affects a company's risk and return
asset turnover	A high asset turnover suggests efficient asset use
working capital ratio	The working capital ratio measures short-term liquidity
free cash flow	Free cash flow represents cash available after expenses
shareholder equity	Shareholder equity is the net worth of a company
book value	Book value is an indicator of a company's intrinsic worth
capital structure	A company's capital structure affects financial stability
EBIT	EBIT represents earnings before interest and taxes
EBITDA	EBITDA is widely used to measure profitability
tax expense	Tax expense impacts the company's net profit
depreciation expense	Depreciation expense reduces taxable income
interest expense	Interest expense affects net income
operating cash flow	Operating cash flow is key to financial health