finance Flashcards
why is financial analysis important?
Financial analysis cna help a firm to make more informed decisions based upon their fincial data. A firms financial data can also be compared to a competors to see if the firm has any advantages or disadvantages in comparasion.
why might souly focusing upon fincial data be an issue for a firm.
By focusing primarily upon finanical data a firmis ingoring its internal non-numerical factors such as its employee motivation as well as the quality of staff and or products.
A firm would also be ignoring non-numerical external factors such as the economy or politcal factors.
what is a balance sheet
list of a firms assets and liabilities
what is an asset
things belonging to the business
what is a liability
something the business owes
what is a non- current asset
something that the business will keep for over a year
what is a non- current liability
a dept the business will have for over a year
give an example of current assets
recivables (money owed to the business from customer) , cash in the till
give an example of non-current liabilities
morages or loans
what is an issue of having high non-current assets
assets depreciate over time, meaning they loose value, this could be due to wear and tear meaning decreases in quality. Or new better product could be released meaning that the product looses value.
