balance sheet (2) Flashcards
why are the information analysed?
to understand the enterprise’s performance
what can an enterprise do when it analyses the information?
can make suggestions to advise the enterprise on the actions it may need to take
information in the balance sheet:
fixed assets
assets not easily converted into cash
information in the balance sheet:
current assets
assets easily converted into cash
information in the balance sheet:
what is owned by the enterprise?
the total liabilities
information in the balance sheet:
what is owned by the enterprise (assets)?
the total assets - fixed and current
information in the balance sheet:
what is included in the net current assets?
current assets and current liabilities
information in the balance sheet:
what is capital?
shareholders’ funds and retained profits
information in the balance sheet:
what are the long-term liabilities?
debts that have to be paid over more than one year
information in the balance sheet:
what are the current liabilities?
debts that need to be repaid within one year
can the enterprise pay its short-term liabilities:
what does an enterprise need to look for?
by calculating the net current assets (current assets - current liabilities).
can the enterprise pay its short-term liabilities:
what does it mean if the net current assets figure is negative?
the enterprise may not have enough cash to pay its short-term debts
can the enterprise pay its short-term liabilities:
what are the 4 possible actions to take?
increase sales
reduce credit terms to customers
sell off fixed assets
reduce expenses
can the enterprise take a long-term loan to help it grow:
what does an enterprise need to look for?
the figure for long-term liabilities
can the enterprise take a long-term loan to help it grow:
what does it mean if long-term liabilities are large?
the enterprise may find it difficult to get additional business finance
can the enterprise take a long-term loan to help it grow:
what are 2 possible actions to take?
sell off fixed assets
use cash to pay off some long-term loans
what is the value of debtors:
what does an enterprise need to look for?
debtors in current assets
what is the value of debtors:
what does it mean if the figure is large compared with other current assets?
may be a risk that some customers will not pay the money they owe to the enterprise.
what is the value of debtors: possible actions to take
what can they reduce provided to new customers?
reduce the amount of trade credit
what is the value of debtors: possible actions to take
who can the enterprise chase up?
chase up customers who owe money
has the enterprise made a profit:
what does an enterprise need to look for if it has made profit?
the figure for retained profit
has the enterprise made a profit:
what does it mean if the profit has increased or decreased?
compare the figure with the retained profit from the previous year
has the enterprise made a profit: possible actions to take
what can the enterprise increase?
sales
has the enterprise made a profit: possible actions to take
what are 2 ways the enterprise could reduce?
the cost of sales
expenses
