Income statements
- Created by: hollymason
- Created on: 04-04-17 14:36
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- Income statements
- Their use: Measures success compared to other years, assess performance between estimated and actual figures,
- Profit and income statements: It attracts new businesses to market, encourages existing ones to grow and motivates.
- Provides stakeholders knowledge on performance
- Exceptional: large-one off transactions Extraordinary: large transactions outside of normal activity not expected to reoccur
- Window dressing; Improves the look of balance sheet
- Borrow short term money before it's drawn up making it look like company has ability to pay short-term debt.
- Sale and leaseback: sell major non-current assets then leaseback.
- Capitalising expenditure: purchasing non-current assets and including them as fixed assets on BS.
- Interpreting Income statements
- Shareholders: profit= guidance on performance.
- Managers: shows performance in greater detail. .
- Employees: look at profits after tax if pay is related to performance and will look at dividends if they're shareholders.
- HMRC: check business meets standards, check taxes
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