financial analysis Flashcards
income statement other name
profit or loss statement
balance sheet other name
statement of financial position
income statement
shows revenue and expenses over a given period of time
balance sheet
provides a snap shot at a given time of the businesses net worth, and the value of what it owns and owes
gross profit
total revenue - cost of sales
operating profit
total revenue - cos- operating expenses
net profit
total revenue - cos - operating profit + profit form other activities - net finance costs - tax
non current asset
owned for more than a year
current asset
owned for less that one year
non current liability
owed debts that are due to be paid off for more than one year
current liabilty
debts that need to be paid off in less than one year
equity
funds provided by share holders though share capital and reserved profit
trade receivables
debts owed to the business by creditors (people who got it and haven’t paid for it)
trade payables
the money the business owes to its suppliers
working capital
the amount of money there is available to pay short term liabilities- everyday payments
working capital formule
current assets - current liabilites
financial ratios
allow a comparison to be made about performance from the previous year’s competition and industry standards
capital employed formule
total equity + non-current liabilities
current ratio
current assets / current liabilities
types of ratios
profitability, liquidity , gearing, efficiency
profitabity ratios
current ratio and acid test ratio
acid test ratio
current assets( - inventory) / current liabilities
return on capital employed
operating profit / total equity +non current liabilities ( capital employed) x100
gearing ratio
non current liabilities / total equity - non current liabilities (capital employed) x 100
receivables
receivables / revenue x 365
payables
payables /cost of sales x365
inventory turnover
cost of sales/inventory held
