BUSS 3 Financial Accounts

What is Profit Quality?
A measure of whether profit is sustainable in the long-run
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What is High-quality profit?
Profit that will continue
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What is Low-quality profit?
Profit arising from exceptional circumstances that is unlikely to continue
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What is Profit Utilisation?
the way in which a business uses its profit
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What are the three types of current assets?
1.) Cash 2.) Debtors 3.) Stock
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What are the two types of liability?
1.) Non-current (long-term) 2.) Current (debts that are settled in less than one year)
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Who would be interested in the balance sheet?
Managers, Shareholders, Creditors, Suppliers
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Why do balance sheets balance?
Because of dual aspect (everything is always cancelled out)
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How can you solve working capital problems?
reduce trade credit, negociate extra credit with supliers, negociate additional short-term loans, cut production costs, sale and leaseback
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what is depreciation?
the reduction in the value of an asset over a period of time - it is an expense
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Other cards in this set

Card 2

Front

What is High-quality profit?

Back

Profit that will continue

Card 3

Front

What is Low-quality profit?

Back

Preview of the front of card 3

Card 4

Front

What is Profit Utilisation?

Back

Preview of the front of card 4

Card 5

Front

What are the three types of current assets?

Back

Preview of the front of card 5
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