Finance

Question 1

What is a balance sheet?

Answer 1

A financial statement that provides a snapshot of a companies financial situation at a specific point in time.

Question 2

Net Assets Calculation

Answer 2

Total Assets - Total Liabilities

Question 3

Equity/ Share Capital

Answer 3

The Capital a business gains from the exchange of shares on the stock market.

Question 4

Capital Employed

Answer 4

The total amount of capital used for the acquisition of a profits by a firm

Question 5

What is the current ratio?

Answer 5

Current Assets/ Current Liabilities

Measures the companies ability to pay short term liabilities

Question 6

What is the acid test?

Answer 6

Current Assets - Stock / Current liabilities

Measures the liquidity of the business

Question 7

What is gearing?

Answer 7

(Non Current Liabilities / Capital Employed) x100

Compares a companies debt to its capital.

Question 8

What is ROCE?

Answer 8

Return On Capital Employed

(Net Profit/ Capital Employed) x100

Measures relative profitability taking into account how much has been spent.

Question 9

PED Formula

Answer 9

% Change in quantity demanded / % Change in price

Question 10

YED Formula

Answer 10

% Change in quantity demanded / % Change in income

Question 11

Percentage Change Formula

Answer 11

((New-Old) / Old) x100

Question 12

Working Capital

Answer 12

Current Assets - Current Liabilities

The capital used for a business’s day to day operations