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Accounting Summary - – Managers through the organization...

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Price/Earnings Ratio (method for estimating the value of a company, higher = better) Market price (of the company)/Net income Financial Leverage Ratio (higher the leverage, the more borrowing is occurring, "smart" leverage always maximizes capital) Average total asset/Average SE Net Profit Margin (for high end companies) Net income/Net Sales Asset Turnover Ratio (measures the sales generated per dollar of assets, used to assess company's effectiveness at controlling CA and NCA, for low end companies) Sales (for operating) revenues/Average total assets Earnings Per Share Net income/weighted average # of common shares outstanding Return on Assets Net Income/Average total assets Managerial Accounting System – Prepares detailed plans, forecasts and reports for internal decision makers External Decision Makers – (investors, creditors, suppliers, customers, etc) Internal Decision Makers
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Unformatted text preview: – Managers through the organization Income statement Revenue – Expenses = Net Income Statement of Retained Earnings Beginning Balance + Net Income – Dividends = Ending Balance Balance Sheet Assets = Liabilities + SE Assets Debit (+)* Credit (–) Accrued Expenses Accrued Revenue Expense – debit Receivable – Debit Liabilities Payable – credit Revenue – Credit Debit (–) Credit (+)* SE Debit (–) Credit (+)* Operating – CA, CL and NI Financial – NCL, CS and Div Investments – NCA Unearned Revenue Prepaid Expense Depreciation Cash – debit Prepaid Expense – debit Equipment – Debit Unearned Revenue (liability) – credit Cash – credit Cash – Credit Unearned Revenue – debit Expense – debit Depreciation Expense – debit Revenue – credit Prepaid Expense – credit Acc Depreciation – credit...
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