analysing financial performance Flashcards
whats an asset
the items a business owns
what’s a liability
the amounts a business owes (debt)
what’s shareholders capital
the money provided to the business by the owners
what’s a non-current asset
something they own for more than a year e.g machines
what’s a current asset
things a business expects to turn into cash within a year e.g stock
- useful life of less than a year
valuing fixed assets
value changes regularly and is influenced by their usage (tangible assets) and brand value (intangible assets)
what’s the value of a fixed asset shown as
net book value
what does depreciation
tangible assets reduce in value
what are the categories stock is classified as
- raw materials
- work in progress
- finished goods
what’s a debtor
money that is owed to a business and is expected to be repaid within a year
what’s a long term liability
things that a business has more than a year to pay back
what’s a current liability
things a business must pay back within a year
what’s net current assets
how capable a business is of paying their short term debts in effect it shows the cash they have in hand
net current asset equation
current assets - current liabilities
net assets equation
(non-current assets + current assets) - (non-current liabilities + current liabilities)
