Financial Analysis: Clever Toy Company

A financial statement that shows the assets, liabilities, and owners' equity of a company at a specific point in time.

A measure of how easily an asset can be converted into cash.

Assets that are expected to be converted into cash within one year.

Assets that are expected to be held for more than one year.

Obligations that are due within one year.

Obligations that are due after one year.

The owners' stake in the company.

a financial statement that shows revenues and expenses for a particular period of time, such as a quarter or year.

A comprehensive report on the factors that influenced a company's earnings during a specific period.

A balance sheet that shows financial data for more than one year.

The amount of profit a company has left after deducting all expenses except interest expense and income taxes.

The amount of profit a company has left after deducting all expenses including interest expense but before deducting income taxes. It represents a firm's profit before taxes.

The cost of goods sold (COGS) is directly related to creating the products or services that a company sells.

The expenses associated with running a business, but not directly related to producing the product or service.

The amount of profit a company earns from its core business operations, before interest and taxes are factored in.

The profit a company earns from investments, such as stocks or bonds, outside of its core business.

A statement that outlines the changes in owners' equity over a period of time.

The difference between a company's revenues and all expenses, including taxes. It represents the company's profitability for a given period.

Expenses that reduce net income but don't involve a transfer of cash. It's an accounting concept that impacts profitability but not actual cash flow.

The amount of money that a company has left in its cash account after all the bills are paid. It's a measure of the company's liquidity.

The remaining subtotal after deducting cost of goods sold from revenues. It represents the profit a company earns from its products before accounting for other operating expenses.

A noncash expense that reduces net income but does not require a cash outlay. It is added back to net income when calculating cash flow from operating activities.

An increase in accounts receivable indicates that cash has been used up because customers owe money.

A decrease in accounts receivable indicates that cash has been freed up because customers have paid their debts.

An increase in inventory signals that cash has been invested in purchasing more inventory.

A decrease in inventory shows that cash has been freed up from the sale of inventory.

An increase in accounts payable signifies that cash has been freed up because payments are delayed.

A decrease in accounts payable signifies that cash has been used up because more debt has been repaid.

This section of the statement of cash flows shows cash flows related to the purchase and sale of long-term assets, such as property, plant and equipment.

A type of financial statement analysis where a company's performance is compared with its own past performance, allowing for the observation of trends and progress over time.

The process of evaluating financial statements with a focus on identifying the relationship between individual items, allowing for a deeper understanding of their impact and connection.

The practice of analyzing changes in financial data between different periods, often comparing the current period to the previous period.

A benchmark used in vertical analysis representing the main source of revenue and is used to express other components as a percentage of it.

The main objective of financial accounting that ensures coherence and consistency in presenting critical financial data across multiple companies and time periods.

The ability to understand and interpret financial statements, revealing insightful trends and patterns that guide informed decisions.

A measure of a company's ability to generate profits from its sales. It is calculated as net income divided by revenue.

A metric that shows how effectively a company uses its assets to generate sales. It is calculated as net sales divided by average total assets.

Measures a firm's ability to meet its short-term financial obligations, as well as its efficiency in managing working capital.

Measures a firm's profitability and asset usage efficiency.

Indicators of a company's financial risk, highlighting how debt and equity are used to finance assets.

The percentage of each sales dollar that remains after all costs of goods sold are deducted. Companies with high gross margins are often in industries with high barriers to entry, strong brand recognition, or limited competitors.

Reflect a firm's ability to quickly convert assets into cash to meet short-term obligations.