3.5.1 Interpretations of financial statements Flashcards
1
Q
What does a balance sheet show?
1
A
- What business owns and owes (how rich)
2
Q
What are examples of non current assets?
5
A
- Patents/copyright
- Equipment/machinery
- Buildings
- Trade payables
- Vehicles
3
Q
What are examples of current assets?
5
A
- Cash
- Inventories/supplies
- Receivables
- Stock
- Debtors
4
Q
What are examples of current liabilities?
2
A
- Dividends
- Notes payable
5
Q
What are examples of non current liabilities?
3
A
- Debentures
- Long term loans
- Bonds payable
6
Q
Who is interested in statement of comprehensive income (profit+loss)?
5
A
- Shareholders (profit)
- Gov agencies (tax)
- Suppliers (reliability)
- Potential shareholders and bankers (providing)
- Staff (profit related bonus)
7
Q
How do businesses use profits?
2
A
- Distributed profit (dividends)
- Retained profit (Reinvest)
8
Q
When is a balance sheet important to a banker?
3
A
- Deciding to invest
- Lend it some money
- Buy organisation outright
9
Q
What is a companies 3 main sources of long term capital?
3
A
- Shareholders (share capital)
- Banks (loan capital)
- Retained profits (reserves)
10
Q
How do you calculate total equity?
1
A
- Share capital + reserves
