Finance/Accounting

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Finance/Accounting

• Functional Review

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The Finance/Accounting Functions Defined
Investment Decision The Allocation and
Reallocation of Capital and Resources to
Projects, Products, Assets, and Divisions of an
Organization
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The Finance/Accounting Functions Defined (cont.)
Financing Decision Determining the Best Capital
Structure for a Firm Evaluating Methods for
Raising Capital
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The Finance/Accounting Functions Defined (cont.)
Dividend Decision Concerns Issues Such as the
Percentage of Earnings Paid to Stockholders, the
Stability of Dividends Paid Over Time, and the
Repurchase of Issuance of Stock
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Basic Types of Financial Ratios
Liquidity Ratios Leverage Ratios Efficiency
Ratios Profitability Ratios Growth Ratios
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Liquidity Ratios

• The Cash Ratio
• The Quick Ratio
• The Current Ratio

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Leverage Ratios

• The Debt Ratio
• The Debt-to Equity Ratio
• Equity Multiplier
• Times Interest Earned Ratio

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Efficiency Ratios

• Inventory Turnover
• Days Sales Outstanding
• Sales per Employee

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Profitability Ratios

• Net Profit Margin
• Return on Assets (ROA)
• Return on Equity (ROE)
• Gross Profit Margin

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Growth Ratios

• Sales Annual Growth in Total Sales
• Income Annual Growth in Profits
• Earnings Per Share Annual Growth in EPS
• Dividends Per Share Annual Growth in DPS
• Price-earning Ratio

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Analysis of Ratios

• Analyze Ratios over Time
• Compare with Industry Averages

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