Asessing Competitiveness Flashcards
Assessing financial performance
Analysing the data presented and giving a view as to what it means, how well or not the business has performed based on financial data
Financial statement
Shows the performance of the business over time in terms of revenue and profit
Profitability
Illustration of the relative profitability of the business
Return on capital employed
The profit of the business, as a percentage, of the amount of money used to generate it
Liquidity
The ease with which assets can be converted into cash
Current ratio
Assesses whether or not the business has enough resources to meet any debts that arise in the next 12 months
Acid test ratio
Measures the whether a firm has sufficient short-term assets to cover its immediate liabilities
Liabilities
Money owned by the business to banks and suppliers for example
Current liabilities
Money owed by the business that must be repaired WITHIN one year
Non-current liabilities
Money owed by the business for more than one year, long-term liabilities
Assets
Resources that belong to a business
Current assets
Liquid assets, those assets that will be converted into cash WITHIN one year
Non-current assets
Long term resources that will be used by the business repeatedly over a period of time
Ratio analysis
Involves using information from the financial statements and turning it into numbers which are easy to understand and can be used to compare the performance of the business over time
Gearing ratio
Shows whether the firms capital structure is likely to be able to continue to meet interest payments
