Financial Definitions

Question 0

Financial objective

Answer 0

An objective of the finance department , such as increase profitability

Question 1

Financial strategies

Answer 1

These are the plans to structure and manage an organisation finances effectively in order to support the achievement of its medium to long term objectives

Question 2

Profitability

Answer 2

Profit expressed against another relevant figure , such as revenue or capital invested. It is the amount of profit and percentage return generated

Question 3

Dividend per share ( what it shows)

Answer 3

Total dividends divided by the number of issues shares in the company.shows how much shareholders are receiving per share they own

Question 4

Dividend yield (what it shows)

Answer 4

Attempt to judge the real returns from the dividends received by a shareholder by dividing dividends revived by the current share price and multiplying the answer by 100 to express as a percentage

Question 5

Assets

Answer 5

Items a business own that have value to it. Spending on these is a capital costs and assets and spending are recorded on the balance sheet

Question 6

Balance sheets

Answer 6

Capital document , which measures at a single point of time (snapshot ) , where a company got its funds from and what it spent them on , it’s assets ,liabilities and equity.

Question 7

Capital

Answer 7

The amount of the owners investment which will be equal to assets minus liabilities

Question 8

Capital costs

Answer 8

Monies spent on things the business has not used up in the last year , such as buildings and machinery

Question 9

Revenue costs

Answer 9

Monies spent on things the business has used up in the last year , such as stock power and wages . They no longer have any value to and are written off in the income statement

Question 10

Capital inflows

Answer 10

Sums received from the loans or the sale of shares. Recorded on the balance sheet

Question 11

Revenue inflows

Answer 11

Sums received from the loans or sale of their goods and services. Recorded on the income statement

Question 12

Inventories/stock

Answer 12

Goods the business intends to sell . In manufacturing business includes components , work in progress and finished products

Question 13

Trade accounts receivable

Answer 13

Suppliers the business owes money to and need to be paid in the next few weeks . A current liability

Question 14

Current liabilities

Answer 14

This is a debt that a business owes to an external body , which will need to be settled within 12 months

Question 15

Non current (fixed assets)

Answer 15

Items the business owns and has value to it . They will be kept for the next 12 months. Such as land buildings

Question 16

Liquidity

Answer 16

The amount of ready cash in a business and the sped with which assets can be turned to cash

Question 17

Intangible assets

Answer 17

Things the company owns and has value to it but are non physical resources such as brand names and rep

Question 18

Goodwill

Answer 18

An intangible assets that can be included in a balance sheet it is the difference between the net assets of a business acquired and the price paid for the business

Question 19

Going concern

Answer 19

The idea that if s business is viable and will continue to trade that all the asset placed on the balance sheet are valued as if the business where to continue trading rather than selling them

Question 20

Net current assets

Answer 20

Current assets - current liabilities . The money used for the day to day running of a business . It can be called working capital

Question 21

Overtrading

Answer 21

Where a business suffers financial difficulties from expanding too quickly

Question 22

Depreciation

Answer 22

Accountants way of spreading the costs of a fixed asses over its estimated lifetime.

Question 23

Reserves

Answer 23

Accumulated retained profit it is recoded on the balance sheet

Question 24

Income statement

Answer 24

A financial statement that summarises the trading results ( revenue entries) of a business over year