DEFINITION OF 'TANGIBLE ASSET'

Assets that have a physical form. Tangible assets include both fixed assets, such as
machinery, buildings and land, and current assets, such as inventory. The opposite of a
tangible asset is an intangible asset. Nonphysical assets, such as patents, trademarks,
copyrights, goodwill and brand recognition, are all examples of intangible assets.
DEFINITION OF 'CASH AND CASH EQUIVALENTS - CCE'
An item on the balance sheet that reports the value of a company's assets that are cash or
can be converted into cash immediately.
DEFINITION OF 'ACCOUNTS RECEIVABLE - AR'
Money owed by customers (individuals or corporations) to another entity in exchange for
goods or services that have been delivered or used, but not yet paid for. Receivables usually
come in the form of operating lines of credit and are usually due within a relatively short
time period, ranging from a few days to a year.
DEFINITION OF 'LONG-TERM LIABILITIES'
In accounting, a section of the balance sheet that lists obligations of the company that
become due more than one year into the future. Long-term liabilities include items like
debentures, loans, deferred tax liabilities and pension obligations. The portions of long-term
liabilities that will come due within the next 12 months are listed under current liabilities,
such as the current portion of long-term debt.
DEFINITION OF 'CURRENT LIABILITIES'
A company's debts or obligations that are due within one year. Current liabilities appear on
the company's balance sheet and include short term debt, accounts payable, accrued
liabilities and other debts.
DEFINITION OF 'RETAINED EARNINGS'

The percentage of net earnings not paid out as dividends, but retained by the company to
be reinvested in its core business, or to pay debt. It is recorded under shareholders'
equity on the balance sheet.
The formula calculates retained earnings by adding net income to (or subtracting any net
losses from) beginning retained earnings and subtracting any dividends paid to
shareholders:

Also known as the "retention ratio" or "retained surplus".

DEFINITION OF 'DEBT/EQUITY RATIO'
A measure of a company's financial leverage calculated by dividing its total liabilities by
stockholders' equity. It indicates what proportion of equity and debt the company is using to
finance its assets.

Note: Sometimes only interest-bearing, long-term debt is used instead of total liabilities in
the calculation.
Also known as the Personal Debt/Equity Ratio, this ratio can be applied to personal financial
statements as well as corporate ones.
DEFINITION OF 'WORKING CAPITAL'
A measure of both a company's efficiency and its short-term financial health. The working
capital is calculated as:

The working capital ratio (Current Assets/Current Liabilities) indicates whether a company
has enough short term assets to cover its short term debt. Anything below 1 indicates
negative W/C (working capital). While anything over 2 means that the company is not
investing excess assets. Most believe that a ratio between 1.2 and 2.0 is sufficient.Also
known as "net working capital"