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Description
Flashcards by Libby Rose, updated more than 1 year ago
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Created by Libby Rose
over 8 years ago
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| Question | Answer |
| PROFIT | SALES REVENUE - TOTAL COSTS |
| GROSS PROFIT | SALES REVENUE - COST OF SALES |
| OPERATING PROFIT | GROSS PROFIT - OTHER OPERATING EXPENSES |
| PROFIT FOR THE YEAR (NET PROFIT) | OPERATING PROFIT - INTEREST AND TAXATION |
| COST OF SALES | COSTS DIRECTLY LINKED TO THE PRODUCTION OF THE GOODS AND SERVICES SOLD EG. RAW MATERIALS |
| EXCEPTIONAL ITEMS | ANY UNUSUALLY LARGE OR INFREQUENT TRANSACTION |
| STATEMENT OF COMPREHENSIVE INCOME (PROFIT AND LOSS ACCOUNT) | A FORMAL FINANCIAL DOCUMENT THAT SUMMARISES A BUSINESS' TRADING ACTIVITIES AND EXPENSES TO SHOW WHETHER THE BUSINESS HAS MADE A PROFIT OR LOSS. |
| PROFITABILITY | PROFITABILITY MEASURES THE EFFICIENCY OF A BUSINESS IN GENERATING PROFIT. THEY CAN BE MEASURED THROUGH PROFIT MARGINS, THESE MEASURE PROFIT AS A PERCENTAGE OF SALES REVENUE. |
| GROSS PROFIT MARGIN | GROSS PROFIT ___________________ X 100 REVENUE |
| OPERATING PROFIT MARGIN | OPERATING PROFIT __________________ X 100 REVENUE |
| PROFIT FOR THE YEAR (NET PROFIT) MARGIN | NET PROFIT _________________ X 100 REVENUE |
| STATEMENT OF FINANCIAL POSITION (BALANCE SHEET) | A BALANCE SHEET IS A FINANCIAL STATEMENT THAT SHOWS THE ASSETS, LIABILITIES AND CAPITAL OF A BUSINESS ON A PARTICULAR DATE. |
| LIQUIDITY | THE PROPORTION OF A BUSINESS'S ASSETS THAT ARE HELD IN A FORM EASILY CONVERTED INTO CASH. |
| CURRENT RATIO FORMULA | CURRENT ASSETS ______________________ : 1 CURRENT LIABILITIES |
| ACID TEST RATIO FORMULA | CURRENT ASSETS - INVENTORY ______________________________________ :1 CURRENT LIABILITIES |
| WORKING CAPITAL | THIS IS THE AMOUNT OF MONEY AVAILABLE FOR THE DAY TO DAY RUNNING OF THE BUSINESS. A NEGATIVE FIGURE CAN BE A PROBLEM FOR SOME BUSINESSES THAT MAY NEED TO PAY FOR OUTSTANDING DEBTS BUT, DO NOT HAVE ENOUGH SPARE CASH TO DO SO. |
| ASSETS | OWNED BY THE BUSINESS OR OWED TO THE BUSINESS |
| LIABILITIES | AN INDIVIDUAL OR THE BUSINESS OWES MONEY TO SOMEONE/ANOTHER BUSINESS. IT ALSO SHOWS THE SOURCE OF CAPITAL THE BUSINESS HAS RAISED IN ORDER TO PURCHASE ITS ASSETS. |
| NON -CURRENT ASSETS | ASSETS THEY EXPECT TO RETAIN FOR MORE THAN ONE YEAR EG. LAND, PROPERTY AND MACHINERY |
| CURRENT ASSETS | ASSETS THAT ARE LIKELY TO BE CONVERTED INTO CASH BY THE NEXT BALANCE SHEET EG. CASH INVENTORIES (STOCK) & RECEIVABLES (DEBTORS) |
| CURRENT LIABILITIES | DEBTS THAT WILL BE PAID WITHIN ONE YEAR OR LESS EG. TRADE CREDIT (PAYABLES) |
| LONG TERM(NON-CURRENT) LIABILITIES | DEBTS THAT WILL TAKE LONGER THAN ONE YEAR TO PAY OFF EG. BANK LOANS AND MORTGAGES |
| TOTAL EQUITY | THIS IS THE ASSETS (USUALLY CASH) RECEIVED FROM THE SHAREHOLDERS + ANY PROFITS MADE BY THE COMPANY THROUGH TRADING THAT REMAINS UNDISTRIBUTED. = NET ASSETS |
| NET CURRENT ASSETS (LIABILITIES) | CURRENT ASSETS - CURRENT LIABILITIES KNOWN AS WORKING CAPITAL. |
| NET ASSETS | (CURRENT + NON CURRENT ASSETS) - (CURRENT + NON CURRENT LIABILITIES) |
| ACID TEST | MEASURES THE VERY SHORT TERM LIQUIDITY OF A BUSINESS. MORE ACCURATE THAN THE CURRENT RATIO AS INVENTORIES CAN TAKE TIME TO SELL |
| CURRENT RATIO | MEASURES THE ABILITY OF A BUSINESS TO MEET ITS LIABILITIES IN THE NEXT YEAR OR SO. |
| LIQUIDITY | THE ABILITY OF A BUSINESS TO PAY ITS DEBTS |
| WORKING CAPITAL (TUTOR2U) | THE AMOUNT OF MONEY THAT A BUSINESS HAS AVAILABLE |
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