balance sheet (2)

Question 1

why are the information analysed?

Answer 1

to understand the enterprise’s performance

Question 2

what can an enterprise do when it analyses the information?

Answer 2

can make suggestions to advise the enterprise on the actions it may need to take

Question 3

information in the balance sheet:
fixed assets

Answer 3

assets not easily converted into cash

Question 4

information in the balance sheet:
current assets

Answer 4

assets easily converted into cash

Question 5

information in the balance sheet:
what is owned by the enterprise?

Answer 5

the total liabilities

Question 6

information in the balance sheet:
what is owned by the enterprise (assets)?

Answer 6

the total assets - fixed and current

Question 7

information in the balance sheet:
what is included in the net current assets?

Answer 7

current assets and current liabilities

Question 8

information in the balance sheet:
what is capital?

Answer 8

shareholders’ funds and retained profits

Question 9

information in the balance sheet:
what are the long-term liabilities?

Answer 9

debts that have to be paid over more than one year

Question 10

information in the balance sheet:
what are the current liabilities?

Answer 10

debts that need to be repaid within one year

Question 11

can the enterprise pay its short-term liabilities:
what does an enterprise need to look for?

Answer 11

by calculating the net current assets (current assets - current liabilities).

Question 12

can the enterprise pay its short-term liabilities:
what does it mean if the net current assets figure is negative?

Answer 12

the enterprise may not have enough cash to pay its short-term debts

Question 13

can the enterprise pay its short-term liabilities:
what are the 4 possible actions to take?

Answer 13

increase sales
reduce credit terms to customers
sell off fixed assets
reduce expenses

Question 14

can the enterprise take a long-term loan to help it grow:
what does an enterprise need to look for?

Answer 14

the figure for long-term liabilities

Question 15

can the enterprise take a long-term loan to help it grow:
what does it mean if long-term liabilities are large?

Answer 15

the enterprise may find it difficult to get additional business finance

Question 16

can the enterprise take a long-term loan to help it grow:
what are 2 possible actions to take?

Answer 16

sell off fixed assets
use cash to pay off some long-term loans

Question 17

what is the value of debtors:
what does an enterprise need to look for?

Answer 17

debtors in current assets

Question 18

what is the value of debtors:
what does it mean if the figure is large compared with other current assets?

Answer 18

may be a risk that some customers will not pay the money they owe to the enterprise.

Question 19

what is the value of debtors: possible actions to take

what can they reduce provided to new customers?

Answer 19

reduce the amount of trade credit

Question 20

what is the value of debtors: possible actions to take

who can the enterprise chase up?

Answer 20

chase up customers who owe money

Question 21

has the enterprise made a profit:
what does an enterprise need to look for if it has made profit?

Answer 21

the figure for retained profit

Question 22

has the enterprise made a profit:
what does it mean if the profit has increased or decreased?

Answer 22

compare the figure with the retained profit from the previous year

Question 23

has the enterprise made a profit: possible actions to take

what can the enterprise increase?

Answer 23

sales

Question 24

has the enterprise made a profit: possible actions to take

what are 2 ways the enterprise could reduce?

Answer 24

the cost of sales
expenses