A liquidity ratio that looks at whether a business can pay for current liabilities out of cash and near-cash assets (ignores that value of stocks)
A ratio that calculates the relationship between revenues and the total assets employed in a business.
Amounts owned by, or owed to a business.
Average rate of return
A measure of the total accounting return from an investment project.
The financial statement that provides a snapshot of the assets and liabilities of a business at a particular date.
Expenditure on assets which are intended to be kept in the business (e.g. IT systems, machinery) rather than sold or turned into products.
Cash flow targets
Specific objectives set by a business for cash-flow generated by a business
The tax levied on the profits of companies. The percentage varies depending on the size of the profits earned, typically 20-30%.
A strategy of achieving the most cost-effective way of delivering goods and services to the required level of quality.
A ratio that estimates the average period (in days) taken to settle amounts owed by a business to suppliers
A simple and popular measure of liquidity that assess the ability of current assets (e.g. cash, stocks) to finance current liabilities (e.g. trade creditors)
A long term source of finance - a debenture is a form of bond or long term loan issued by a company.
A ratio that focuses on the average time it takes for trade debtors to settle their accounts. Usually measured in days.
An accounting estimate of the fall in value of a fixed asset over time.
The multiplication factor that converts a projected cost or benefit in a future year into its present value.
Amounts paid to shareholders out of the profits earned by a company.
A measure of shareholder return - calcuulated by comparing the dividend per share by the share price.
Assets such as property, equiptment and vehicles that are intended to be retained and used in a business for more than a year.
A ratio that focuses on the long term financial stability and capital structure of a business. The gearing ratio measures the proportion of assets in a business that are financed by borrowing.
A business that is viabe and able to continue in business for the foreseeable future.
An intangiable asset that can be included in a balance sheet = the difference betwen the net assets of a business acquired and the price paid for the business.
A financial statement that summaries the trading results of a business over a specfic period - usually one year.
Analyticial techniques to help managment evaluate returns from potentia investments and help chose between competing investments.
Amounts owed to a business by others.
The ability of a business to finance required payments to creditors.
Net present value
The present value of a series of a future net cash flow that will result from an investment, minus the amount of the original investment.
The profit earned by a business from its entire trading operations - started before financing (e.g. interest) and tax.
Where a business suffers financial difficulties from expanding too quickly - usually suffering set up losses and increased working capital.
The time it takes for a project to repay its initial investment.
A seperatey indentifiable part of a business for which it is possible to identify revenue and costs and calulate relevant profit.
The sustainability of profit from one period to the next, higher quality profit is profit that is likely to be repeated rather than affected by one off items.
The amount of profit earned in a period or rate of profit earned compared with revenue.
Amounts set aside to cover future costs or liabilities (e.g. redundancies, business closures, legal disputes)
Interpretation of financial performance by calculating and intepretating ratios.
Profits earned by a business that arer kept in the business rather than distributed as dividends.
Spending on day to day operation of the business e.g. paying for materials, staff costs, managment salaries and advertising
The issue of new shares to existing shareholders in order to raise new finance. The new shares are usually offered at a significant discount to the existing share price to encourage take-up
A measure of the percentage return that a business earns from the capital employed in the business. Often referred to as the “primary ratio”.
The amount invested into a company by shareholders
The rewards earned by shareholders = dividends paid to them and any increase in the value of their shares.
A liquidity ratio that looks at how often a business rotates its stock during a year
Amounts that a business owes to its suppliers.
Amounts that are owed to a business from its customers.
The net amount invested by a business to finance day to day trading usually calcuated as a current assets - current liabilities.