Financial Statements Flashcards
what’s does the statement of financial position show?
the value of an organisation at a particular point this though value of share, assets and liabilities
how is a statement of financial position useful to a business?
- it shows the businesses financial health
- without this snapshot owner may make a decision that have negative effect
- it lets banks how if your business qualifies for additional loans or credit
- compared this year performance with last years assets what has changed
what are fixed assets?
items owned by the business that last longer than a year
what are current assets?
items owned by the organisation that last less than a year
what are debtors?
people who owe the business as bought on credit
what are liabilities?
debts current - short term debts
what are creditors?
people who the business owes money to as bought from them on credit
how is capital employment calculated?
CA - CL
what does financed by show?
how the business is financed and value of shares
what’s the analysis of value of fixed assets has increased?
this is sportive as long as the business has adequate cash flow to pay short term debts
what’s the analysis of value of current liabilities has decreased?
this is positive as the company’s short term debts have decreased show that they have enough working capital to pay short term debts
what is the analysis of worth of the business (capital employed) increasing?
means the company is worth more money
what is the analysis of dividend payment increasing?
business is in a good place financially and shareholder are happy as they are receiving more money
