Company Financial Statements Flashcards
What is a company’s Balance Sheet (Statement of Financial Position)?
A snapshot of a company’s financial position at a particular moment in time
What is a company’s Income Statement (Statement of Profit and Loss)?
Summarises the amount of income earned by a company and the expenditure incurred by that company.
What is a company’s Statement of Cash Flows?
A summary of all payments and receipts that have occurred over the course of the year
[Balance Sheet] What are non-current assets?
Assets in long-term continuing use by the company.
They represent the major investments from which the company hopes to make money.
They are categorised as tangible or intangible.
[Balance Sheet] What are current assets?
Assets purchased with the intention of resale or conversion into cash usually within a year. Eg. inventory, cash balances.
[Balance Sheet] What are tangible non-current assets?
Assets that have physical substance, such as land, buildings and machinery.
[Balance Sheet] What are intangible non-current assets?
Assets without physical substance that are expected to generate future revenue. Eg goodwill, trademarks.
What is included in the Top Half of the Balance Sheet (statement of financial position)?
Assets (non-current & current)
What is included in the Bottom Half of the Balance Sheet (statement of financial position)?
Equity and Liabilities
What is a company’s share capital?
Nominal value of total shares in issue
What is a company’s Share Premium?
The capital that a company raises upon issuing shares that is in excess of the nominal value of the shares
[Balance Sheet] What are Current Liabilities?
Amount owed by the company and due within a year
[Balance Sheet] What are non-current Liabilities?
Amount owed by the company and due after a year
What are the contents of a Statement of Profit and Loss (Income Statement)?
Revenue
Cost of sales
Operating Costs
Profit before tax
Capital v Revenue Expenditure
What 3 sections is the the Statement of Cash Flows broken down into?
- Operating cash flow
- investing activities
- Financing activities
At what point is revenue recognised?
Recognised at point of sale
At what point is cash recognised?
Recognised at point of receipt
What is in the top and bottom halves of the Balance Sheet?
Top: Assets
Bottom: Capital, Reserves, Liabilities
What is in the top and bottom halves of the Income Statement?
Top: Revenue in, Revenue out
Bottom: Profit/Loss
What is in the top and bottom halves of the Statement of cash flows?
Top: Cash in, Cash out
Bottom: Net Cash Flow
Within the Balance Sheet, what are the Reserves?
The amount belonging to shareholders that is retained by the company
Define cost of sales
Costs directly associated with the cost of producing a product or service
What is the Return on Capital Employed (ROCE)?
The best ratio for measuring overall management performance
It looks at what returns have been generated from the total capital employed in a company, including debt as well as equity
ROCE = Operating Profit / Capital Employed
What is the effect on the below for a company undergoing a Bonus Issue:
Share price:
Number of shares:
Nominal Value:
Share Capital Account:
Share Premium Account:
Share price: Reduced
Number of shares: Increased
Nominal Value: Stays the same
Share Capital Account: Rises
Share Premium Account: Falls
What is the effect on the below for a company undergoing a Stock Split:
Share price:
Number of shares:
Nominal Value:
Share Capital Account:
Share Premium Account:
Share price: Reduced
Number of shares: Increased
Nominal Value: Reduced
Share Capital Account: Stays the same
Share Premium Account: Stays same
What is the contents of a Balance Sheet?
Assets (current & non-current)
Share Capital
Liabilities (current & non-current)
Reserves
Retained Earnings
What are Pre-payments
Current assets within the Balance sheet. They are payments made in advance of the Balance Sheet date.
