Using financial data to measure and assess performance 0.0 / 5 ? Business StudiesFinancial PlanningA2/A-levelAQA Created by: Hayleyginny2345Created on: 07-11-13 21:03 What is a Balance sheet Accounting statement of the firm's assets and liabilities on last day of accounting period 1 of 26 What does a Balance sheet list The assets that firm owns and sets these against the balancing liabilities 2 of 26 Non-current assets Machinery, equiptment and vehicles brought for long-term use 3 of 26 Current assets Inventories and raw materials, cash these will all be converted into cash at the end of the financial year 4 of 26 Shareholders equity Money invested in a company to require assests that a business needs to trade 5 of 26 Non-current liabilities Borrowed from external sources which will be repaid over the long term 6 of 26 Current liabilities Debts of the business that will be repaid in the short term - payables and overdrafts 7 of 26 Balance sheet - 'snapshot' Only shows finances from one day in the year 8 of 26 Working Capital funds avaliable to firm for day - to - day operations 9 of 26 Working Capital calculation Current assets - Current Liabilities 10 of 26 What 2 factors does liquidity measure 1) ability for a firm to meet short - term debts and 2) the ability of a business to turn its assets into cash 11 of 26 Liquid assets Easy to covert to cash 12 of 26 Non- liquid Harder to covert to cash 13 of 26 Causes to depreciation 1) wear and tear, 2) Obsolescence - more efficient model replaces old machinery, 3) Time 14 of 26 Income Statement Accounting statement that shows from's sales revenue generated over a trading period and all costs incurred in earning that revenue 15 of 26 Gross profit Measures difference between sales rev. and the cost of producing products that have been sold 16 of 26 Gross profit calculation Sales rev - cost of goods sold 17 of 26 Operating profit When gross profit is calculated u then need to take off other expenses and overheads 18 of 26 Operating profit calc. Gross profit - operating expenses 19 of 26 Fiance income Interest business recieves on accounts that it holds with banks 20 of 26 Finance expenses Interest a business pays on its loans 21 of 26 Profit before and after taxation Companies pay corporation tax on profits. Tax is then deducted to give profit after tax for the year 22 of 26 Profit quality Whether a profit source will continue or not 23 of 26 2 main ways to use profit Retained profit = share of profit kept by company and Distributed profits = profits shared out to external parties, owners and partners 24 of 26 Why is it important to make comparisons See performance of previous years and Performance of similar business 25 of 26 Window dressing is Presenting a companies accounts in a way that enhances the financial position of the company 26 of 26
Chapter 3: Using Financial data to Measure and Assess Financial Performance 5.0 / 5 based on 1 rating
3.7.2 Analysing the existing international position of a business to assess strengths and weaknesses: financial ratio analysis 0.0 / 5
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