Flashcards
Financial Analysis Key points
Cards in this deck (18)
- 1What is a Balance Sheet?Balance sheets are a snapshot of a firms finances at a fixed point in time.
- 2What are assets?Things that the business owns; which will generate more money for them in the future.
- 3What are Liabilities?Current liabilities are debts that the business owes and have to be payed back within a year.
NCL are debts that the business will pay off over several years. - 4What is working capital?The amount of cash that can be easily turned into cash
Current assets - Current liabilities - 5What is an income statement?Shows how much money has been coming into the company and how much is coming out.
- 6What is gross profit?Revenue - Cost of Sales
- 7What is operating profit?Gross profit - operating expenses
- 8What is retained profit?What's left after tax, once dividends has been payed.
- 9What is Current Ratio?Compares current assets to current liabilities
CA:CL
CL is always to 1 - 10What is ROCEReturn on capital employed
How much money is made by the business compared to how much has been put into it - 11How do you calculate ROCE?Operating profit / Total equity + NCL
X100 - 12What is Inventory Turnover Ratio?Compare the cost of all sales a business makes over the year to the cost of average stock held.
Cost of sales / Cost of average stock held - 13Payables Days RatioCompare the amount the business owes to its creditors to the cost of all the sales a business makes over the year
- 14How do you calculate PDR?Payables / Cost of sales X 365
- 15Receivable Days RatioCompares the amount owned to a business by the debtors to the total sales revenue for the year
- 16How do you calculate RDR?Receivables / sales revenue X 365
- 17What is gearing?Shows where a businesses finance has come from.
The proportion of finance that comes from NCL rather than Share Capital or Reserves - 18How to calculate gearing?NCL / Total equity + NCL
X100
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- A-Level A-Level Business Studies Flashcards on Financial Analysis Key points, created by Hollie Ferris on 17/01/2017.
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- Hollie Ferris
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