3.5.1-3.5.3 Acessing Competitivness

Question 1

What does a statement of comprehensive income show?

Answer 1

It shows a firms revenue, costs and profit. eg, Every UK LTD/PLC company has to publicly put there SOCI on the government website.

Question 2

What does a SOCI indicate?

Answer 2

Indicates if a firm is profitable-a profitable firm has a positive net profit.

Question 3

Why would stakeholders be interested in a firms SOCI?

Answer 3

. Shows how profitable the business is (higher the profitability, higher the dividends)
. Trends in net profit over time can show how risky investments are
. A good firm to invest in is one which can increase their revenue without increasing their costs that much.

Question 4

Why would managers be interested in a firms SOCI?

Answer 4

. Interested in seeing if the firms revenue and expenses are changing over time
. If the SOCI is made for each department, the manager can analyse and compare between departments to see where costs an be reduced.

Question 5

Why would loan providers be interested in a firms SOCI?

Answer 5

. Loan providers like banks might be interested in the firms operating profit. They may be unwilling to loan money to a firm with a low operating profit (High risk business wont be able to pay interest).

Question 6

Why would suppliers be interested in a firms SOCI?

Answer 6

To check if a firms past revenue has been enough to pay suppliers.

Question 7

Why would employees be interested in a firms SOCI?

Answer 7

. Interested in the profitability of the business
- indicates if they will be keeping their jobs
. They look at net profit.
- Indicates whether the workers could get a bonus, pay rise, earnings…