Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Business > Section 8- Internal Analysis > Flashcards

Section 8- Internal Analysis Flashcards

1
Q

What is financial accounting?

A

Formal records, summaries and reports of a businesses transactions.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is financial accounting?

A

Formal records, summaries and reports of a businesses transactions.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is management accounting?

A

Presenting and analysing financial data to help management make decisions and monitor progress.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What does a balance sheet provide?

A

A summery of the assets and liabilities of a business. It is specific to that period of time.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

How is information recorded in a balance sheet?

A

By using the double entry system, every transaction has two equal effects on the assets and liabilities.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Who might want to view a businesses balance sheet?

A

Shareholders or potential shareholders as they can view a businesses financial position, cash flow and working capital.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is the equation for working capital?

A

working capital= current assets - current liabilities
A positive number means a good cash flow

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is the equation for net current assets?

A

Net current assets/ working capital= current assets - current liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is the equation for net assets?

A

Net assets= fixed assets + working capital

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is the equation for capital employed?

A

Capital employed = equity & share capital + long term liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is window dressing?

A

A short term strategy used by businesses to make their financial reports look more appealing to shareholders.
e.g. recording future sales or using own funds to increase working capital

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is profitability?

A

Compares profits to other factors such as the amounts of capital used or the sales revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is the equation for gross profit margin?

A

Gross profit margin = gross profit/revenue x100

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is the equation for the operating profit margin?

A

Operating profit margin= operating profit/revenue x100

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is the equation for the profit for the year margin?

A

Profit for the year= profit for the year/revenue x100

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is an income statement?

A

A historical record of the trading of a business over a specific period, shows a firm’s total incomes or losses.

17
Q

What is the equation for gross profit?

A

Gross profit= sales revenue - cost of sales

18
Q

What is the equation for operating profit?

A

Operating profit= gross profit- operating expenses

19
Q

What is the equation for profit before tax?

A

Profit before tax= operating profit - financial costs

20
Q

What three decisions could data help a business decide?

A
  • does the business have enough capital to fund new projects?
  • what would the effect on cash flow be?
  • how might a return on investment perform?
21
Q

What does ROCE stand for?

A

Return On Capital Employed

22
Q

What is the ROCE equation?

A

ROCE = operating profit/capital employed x100

23
Q

What is ROCE?

A

Compares the amount of capital earns with the amount of capital employed, allowing a business to assess the overall financial performance.
Goldie zone= 20%-30%

24
Q

How can you improve ROCE?

A

Increasing operating profit or paying off long term borrowing

25
Q

What is the current ratio used for?

A

To assess if a business has enough cash.

26
Q

What is the equation for current ratio?

A

Current ratio= current assets/current liabilities
Always _: 1

27
Q

What is gearing?

A

The measure of long term liabilities. Essentially how vulnerable a business would be to an increase in interest rates.

28
Q

How could you reduce the gearing ratio?

A
  • reduce non current liabilities (but will decrease cash)
    -increase share capital (but would loose more control)
  • repay long term loans
29
Q

What is the equation for gearing?

A

Non current liabilities/capital employed x100

Business (15 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions