Ratios: Capital Acquisition Ratio definitions Flashcards
Ratios: Capital Acquisition Ratio definitions
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Capital Acquisitions Ratio Indicates how many times operating cash flows can cover cash paid for fixed asset purchases in a period. Operating Cash Flows Cash generated and used by a company's core business activities, shown in the operating section of the statement of cash flows. Fixed Assets Long-term tangible resources such as property, plant, and equipment acquired for business use. Statement of Cash Flows Financial report detailing cash inflows and outflows from operating, investing, and financing activities. Investing Section Part of the statement of cash flows showing cash transactions for buying and selling long-term assets. Financing Section Section of the statement of cash flows reflecting cash flows from debt, equity, and dividend transactions. Property, Plant, and Equipment Major physical assets used in operations, often requiring significant capital investment. Capital Expenditures Cash outlays for acquiring or upgrading fixed assets to maintain or expand business operations. Debt Borrowed funds used to finance business activities, often needed when operating cash flows are insufficient. Numerator The top value in a ratio calculation, representing cash flow from operating activities in this context. Denominator The bottom value in a ratio calculation, representing cash paid for fixed asset purchases. Shareholders Individuals or entities owning equity in a company, affected by financing activities in the cash flow statement. Bond Holders Creditors who lend money to a company through bonds, receiving interest and principal payments. Dividends Distributions of profits to shareholders, recorded in the financing section of the cash flow statement. Expansion Business growth often requiring significant capital expenditures on new or upgraded fixed assets.
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