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Financial Accounting: In an Economic Context by Jamie Pratt

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KEY TERMS

Note: Definitions for these terms are provided in the glossary at the end of the text.

Business segments (p. 184)

Cash flow analysis (p. 206)

Common-size financial statements (p. 189)

Cost of equity (p. 200)

Creating hidden reserves (p. 189)

Debt/equity ratio (p. 192)

Earnings persistence (p. 183)

Earnings quality (p. 185)

Effective sales and expense management (p. 201)

Effective working capital and long-term asset management (p. 201)

Effective capital structure management (p. 201)

Financial flexibility (p. 207)

Leverage (p. 191)

Liquidity (p. 207)

Off-balance-sheet financing (p. 186)

Operating performance (p. 207)

Overstating the performance (p. 185)

Profitability ratios (p. 190)

Ratio analysis (p. 190)

Return on equity (p. 200)

Solvency assessment (p. 206)

Shareholder value creation (p. 200)

Standard audit report (p. 182)

Taking a bath (p. 185)

ETHICS in the Real World

Fortune magazine examined a series of published articles that explored increasingly common, and somewhat shady, business practices in the Internet world. These practices included: (1) how dot-coms intentionally inflate revenues, (2) how CEOs buy and sell large amounts of their own company's stock, (3) how boards of directors are often overly influenced by company management, and (4) how analysts who follow Internet companies are sometimes influenced by a company to make overly optimistic assessments of its future prospects.

ETHICAL ISSUE Why are these four business practices a possible violation of ethical ...

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