Finance key terms 2.0 / 5 based on 1 rating ? Business StudiesFinancial PlanningA2/A-levelAQA Created by: PhanCreated on: 05-01-13 14:26 Income statement A financial document that summarises a business's activity and expenses to show whether it has made a profit or loss. 1 of 9 Balance sheet The financial statement that provides a snapshot of the assets and liabilities of a business at a particular date 2 of 9 Acid-test ratio Liquidity ratio that measures the ability of the firm to meet its short-term debts from liquid assets. 3 of 9 Asset turnover A ratio that calculates the relationship between revenues and the total assets employed in a business 4 of 9 Average rate of return The average rate of return (“ARR”) method looks at the total accounting return for a project to see if it meets the target return 5 of 9 Investment appraisal The process of analysing whether investment projects are worthwhile 6 of 9 Payback The payback period is the time it takes for a project to repay its initial investment 7 of 9 Net present value the total net return of an investment stated in today's monetary value. 8 of 9 Discount factor The rate by which future cash flows are reduced to reflect current interest rates 9 of 9
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