Unit 4- Analysing financial performance Flashcards
Favourable Vairence
The actual result is better for the buisness than the amount that was budgeted. This can happen in lower expsenses or higher revenue
Adverse Varience
Actual income is less than budget or expenditure is more than budget. This can happen when revenue is lower than expected or expenses are higher
Trading, Profit and loss account ( Income statement)
- Sales revenue
- Cost of sales
- Gross profit
- Expenses
- Net profit
- Profit after tax
- Dividends
- Retained Profit
Gross Profit Margin
(Gross Profit / Sales revenue) X 100
Net Profit Margin
(Net profit/Sales Revenue) X 100
Gross Profit
Revenue- Cost of goods sold
Net profit
Total revenue- Total expenses
Balance sheet
- Fixed ( Non current assets)
- Current assets
* Stock
* Debtors
* Cash and Bank
* Total Current assets - Current liabilities
* Bank Overdraft and Loans
* Creditors
* Other
* Total current liabilities - Net current assets
- Total Long term liabilities
- Net assets
- Shareholder funds
Capital Employed
Share capital + Retained Profit + Long term Liabilities
Or
Shareholder funds + Long term Liabilites
Return on capital employed
(Net Profit/ Shareholder funds + Long term liabilities) X 100
Working Capital/ Net current assets
Total Current assets - Total current liabilites
Current Ratio
Current assets / Current liabilities
Acid Test Ratio
(Current assets - Stock)/ current liabilites
Gearing
Long- Term Liabilites / ( Shareholders Funds + Long term liabilites) X 100
Depreciation
( Historical cost - Residual Value) / Useful Life
