Practice finance Flashcards
The balanced scorecard combines which elements?
- Finance
- Processes
- Customers
- Learning and developing
Why is profit needed?
- Business expansion and growth
- Reinvestment in key products or equipment
- Ability to borrow money from financial institutions
- Attract investors
- Hire additional staff
Why bother with accounts?
- Legal requirements
- Tax - HMRC can request full set of accounts
- Understand how well a business is performing
- Business planning
- Investments
- Credit
Cost of sales =
Opening stock + purchases - closing stock
Gross profit =
Total sales - cost of sales
Gross profit margin =
(total sales - cost of sales) / total sales
What is an indicators for hoe efficient a firm is overall?
Net profit
What are some examples of indirect costs
Rent
Interest payments
Staff wages
Utilities
Net profit = ?
Gross profit - total expenses
Net profit margin?
Net profit / total sales
What is the net profit margin used for?
Useful to compare groups of companies or practices
Balance sheets provide information on?
The current financial health of a business
- short snap shot of a moment in time
- what a business owns, owes and is owed
What can be seen on a balance sheet?
- Buildings/land owned
- Equipment used
- Stock held
- Money business is owed
- Money business owes
- Funding for assets
What are fixed assets?
- Assets purchased for long term use
* Not normally sold unless being replaced
Name some examples of fixed assets
Land, buildings, machinery, vehicles
Intangibles e.g. brand valuations or goodwill
