Financial Definitions Flashcards
Financial objective
An objective of the finance department , such as increase profitability
Financial strategies
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
Profitability
Profit expressed against another relevant figure , such as revenue or capital invested. It is the amount of profit and percentage return generated
Dividend per share ( what it shows)
Total dividends divided by the number of issues shares in the company.shows how much shareholders are receiving per share they own
Dividend yield (what it shows)
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
Assets
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
Balance sheets
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.
Capital
The amount of the owners investment which will be equal to assets minus liabilities
Capital costs
Monies spent on things the business has not used up in the last year , such as buildings and machinery
Revenue costs
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
Capital inflows
Sums received from the loans or the sale of shares. Recorded on the balance sheet
Revenue inflows
Sums received from the loans or sale of their goods and services. Recorded on the income statement
Inventories/stock
Goods the business intends to sell . In manufacturing business includes components , work in progress and finished products
Trade accounts receivable
Suppliers the business owes money to and need to be paid in the next few weeks . A current liability
Current liabilities
This is a debt that a business owes to an external body , which will need to be settled within 12 months
Non current (fixed assets)
Items the business owns and has value to it . They will be kept for the next 12 months. Such as land buildings
Liquidity
The amount of ready cash in a business and the sped with which assets can be turned to cash
Intangible assets
Things the company owns and has value to it but are non physical resources such as brand names and rep
Goodwill
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
Going concern
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
Net current assets
Current assets - current liabilities . The money used for the day to day running of a business . It can be called working capital
Overtrading
Where a business suffers financial difficulties from expanding too quickly
Depreciation
Accountants way of spreading the costs of a fixed asses over its estimated lifetime.
Reserves
Accumulated retained profit it is recoded on the balance sheet
