Unit 5 ~ Financial Statement and Stock Market

• Assets


  Include all those things the business owns or is owed
• Current Assets


  Assets that can be converted into cash within a year (e.g. inventory, materials, accounts receivable, bonds)
• Fixed Assets


  Assets that can not be readily sold and for which there might be a few buyers willing to pay close to what the assets were worth
• Book Value 


  The cost minus the depreciation
• Quick Assets


  Current Assets excluding inventory
• Intangible Assets 


  Assets such as patents which can not actually be valued as placed at nominal value
• Liabilities


  The amount owed to creditors to get assets
• Current Liabilities 


  The debts that will be paid within a year
• Long Term Liabilities 


  Debts that may run very far into the future
• Shareholder's Equity


  The value of assets remaining if all liabilities were paid
• Capital Stock


  Money raised by the sales of shares in the corporation
• Retained earnings


  Net profit of firm after distributing dividends
• Gross Margin 


  The profit before any expenses are deducted
• Operating Expenses


  Expenses necessary to run the business (e.g. rent, salaries and utilities)
• Liquidity


  Ability of a company to produce enough cash to pay its current bills and finance daily operations

  (measured using current ratio)
• Financial Solvency


  Able to meet its financial objectives and obligations