3.5 Flashcards
What does a statement of comprehensive income show
The income and expenses of the business during the year
The purpose of a statement of comprehensive income
Show whether the business has made a profit or loss over a financial year
Describe how profit or loss arose
What does the trading account show
The income from sales and the costs of making those sales
Working capital formula
Current assets - current liabilities
Working capital definition
The cash that is needed to allow the cash flow cycle to work
Ways to improve working capital
Reduce stock
Reduce trade credit offered
Increase trade credit from suppliers
Fund assets through long term soruces of finance
Reduce unnecessary expenses
Use better stock management systems or lean production
Gearing ratio definition
Looks at where the long term finances of the business come from
Meanings behind the results of the gearing ratio
over 50% - highly geared most money comes from loans very risky for investors
under 50% - low geared most of the money comes from the owners better risk for investors
Greaing ratio formula
Non - current liabilities / capital employed ) x 100
Capital employed definition
the total amount of capital used for the acquisition of profits by a firm or project
Total amount of capital a firm uses to operate
Return of capital employed formula
Operating profit / capital employed ) x 100
Capital employed formula
Non currnet liabilities + total equity
Labour productivity calculation
Total output / number of worker
Labour turnover calculation
Number of employees leaving / average number of employees ) x100
Absenteeism calculation
Number of work days lost through absences / total possible days worked ) x100
