Accounting reports provide a variety of information for evaluating a company. For each accounting number in the following list, write the letter from the description in the right-hand column that indicates the type of information provided by the number.

Accounting Information

__________ Asset turnover

__________ Financial leverage

__________ Growth in assets

__________ Growth in equity

__________ Growth in sales

__________ Growth in return on equity

__________ Investing cash flow

__________ Operating cash flow

__________ Profit margin

__________ Research and development

__________ Return on assets

__________ Return on equity

__________ Fixed asset turnover

__________ Times interest earned

__________ Day’s sales in inventory

__________ Average accounts receivable collection period

Description

a. Ability to create value for stockholders from operating activities

b. Measures the effectiveness of a company in using its investment in fixed assets to create sales

c. Ability to generate sales from total investment

d. Ability to generate profit from sales

e. Use of debt to increase return to stockholders

f. The ratio of operating income to interest expense

g. Direction and amount of change in future return on equity

h. Potential for higher return

i. The ratio of accounts receivable to average daily sales

j. Reinvestment of earnings to increase value of company for stockholders

k. Reinvestment of operating cash to increase value of company for stockholders

l. Growth potential through innovation

m. Ability to create value from total investment

n. Source of cash for new investment and payments to stockholders

o. Ratio of inventory to average daily cost of goods sold

p. Potential for additional sales from increased investment