Statement of Financial Position and Annual Reports Flashcards
Assets are…
What the business owns
A statement of financial position shows…
The value of the business on a particular date
Liabilities are…
What the business owes
Non-current assets show…
The current value of major purchases that help with the running of the business e.g. delivery vans, premises or PCs
Current assets show…
The cash available to the firm. This includes stock ready to sell, money owed to them by debtors and cash in the bank
Current liabilities are…
Any debts a business owes that will need to be paid back within a year
Working equity is the…
Money a business can access immediately, rather than money tied up in investments of property. A business needs adequate working equity to meet short term debt when they need to be paid
Non-current liabilities include…
Long term loans such as long term bank loans or debentures that don’t need to be paid back in a year
Net assets show…
The value of the company once liabilities are taken away from assets
Equity and reserves shows…
The money invested by owners and profit kept by the business. This is retained profit
Purposes of statement of financial position are…x5
Suppliers can use it to determine risk level of supplying to businesses
Future investors can look at history of improvement and financial stability
Existing investors can see growth and sound decision making
Shows overall value of the business and is legally required for limited companies
Analyse ratios that can be compared to previous years of rival that better aids decision making
Annual reports are reported yearly to…
Shareholders documenting the businesses activities and finances in the previous financial years and allow you to draw conclusions as to the performance of the org. These are usually found on the company website
Annual reports can be used to measure…x4
The companies ability to pay its debts when due
Whether the company made profit or loss in the previous year
A companies growth over a number of years
How much of retained profit was reinvested to grow the businesses operations
Annual reports contain…x4
Performance highlights- goals reached, awards
A letter from the CEO
Financial information
Objectives, goals and plans for future years
Annual reports must…
Be accurate but the wording and the tone will contain certain bias as its the businesses opportunity to sell itself
