Business Studies Definitions

Question	Answer
Liabilities	Debts owed by the business
Current Assets	Those assets owned by a business and used within a year
Gross Profit	This is made when sales revenue is greater than the costs of goods sold
Non Current Assets	Items owned by a business for more than one year
Current Liabilities	Short-term debt owned by a business
Working Capital	The finance needed by a business to pay its day-to-day cost
Net Profit	The profit made by a business after all costs have been deduced from sales revenue
Depreciation	The fall in value of a fixed asset over time
Trading account	Shows how the gross profit of a business is calculated
Assets	Those items of value that are owned by the business
Non current liabilities	Long term debts owed by a business
Liquidity	The ability of a business to pay back its short term debts
Capital employed	The total value of capital used in the business. This is : shareholders' equity plus non-current liabilities
Illiquid	This means that assets are not easily convertible into cash
Profit	The total income of a business (sales revenue) minus total costs.
ROCE (Return of Capital employed)	Earnings before interest and Tax / Capital employed
Gross profit margin	Revenue - costs of goods sold / Revenue
Net profit margin	Net profit / total revenue
Acid Test	Current assets-Inventory / Current liabilities
Current Ratio	Current assets / current liabilities

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	Created by p3121 about 9 years ago