Financial statements Flashcards
Income statements
a financial statement showing a business’s revenue, costs over a period of time
Statement of financial position
sets out the assets and liabilities that a business has on a particular day
Why do businesses make financial statements
legally required
to help manager make decision
to guide investors
What is cost of sales
the costs that are involved in directly supplying the good or service
Gross profit
revenue - cost of sales
Overheads
Costs that do not alter when the level of production changes
Operating profit
Gross profit - overheads
Net profit
Operating profit - all costs
Liability
sum of money that is owed by a business.
Current assets
Assets that a business accepts to have for less than a year
Non-current assets
An asset that will be kept for several years
Total equity
part of a company’s money that belongs to a shareholders
money apart from assets and liabilities
Net assets
Assets owned once liabilities have been payed
What are key indicators for a business’s performance overtime in a income
revenue from sales
gross and net profits
Financial ratios
compares two figures from a business’s financial statements
