Chapter 25 - Statement Of Financial Position Flashcards
Trade receivables
Sales that have been completed, but payments are still being awaited
Non current liabilities
Debts which will last longer than 1 year
Assets
Items of value which are owned by the business, current or non current
Liabilities
Debts owed by the business, non-current or current
Non-current assets
Items owned by the business for more than 1 year
Capital employed (def. And 3 sources)
The total value of capital invested into the business
The owner/shareholder
Bank (loan)
Retained profits
Employment of capital
What did we use the capital for
Statement of financial position
Shows the value of a business’s assets and liabilities at a given point in time
Shareholders equity
Total sum of money invested into the business by the owners of the company
ONLY A COMPANY
Share capital
Money put into the business when the shareholders bought newly issued shares
How is shareholders equity invested
Share capital
Retained- kept in business at a part of the shareholders funds
Working capital formula
Working capital = current assets - current liabilities
Capital employed formula
Shareholders funds + non-current liabilities
Uses of financial position data (6)
Shareholders can see the increase/decrease in their stake value
Shareholders can analyse how expansion has been payed for
Calculate working capital
Check the “survivability” of the business
Calculate capital employed
To calculate ratios used to assess business performance
Reserves
Profit from previous years which has been retained to finance future developments
