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18 Cards in this Set
- Front
- Back
Comprehensive statement of income
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A document setting out the revenue, costs and profits of a business over the period of one trading year |
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Gross profit margin
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A measurement of the % of sales revenue that remains as gross profit after the deduction of costs of sales. Calculated as gross profit/sales revenue x 100. |
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Operating profit margin
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A measurement of the % of sales revenue that remains as operating profit after the deduction of cost of sales and operating expenses. Calculated as operating profit/sales revenue x 100. |
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Net profit margin
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A measurement of the % of sales revenue that remains as net profit after the deduction of cost of sales, operating expenses and interest payments. Calculated as net profit/sales revenue x 100 |
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Depreciation
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The loss in value of assets over time due to wear and tear and age. |
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Profit quality
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The extent to which a business' profits are sustainable given the underlying operations of the business, rather than achieved through a one-off event that cannot be repeated (such as the sale of a building) |
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Statement of financial position
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A document summarising the assets and liabilities of a business at the end of it's trading year and providing a breakdown of how the business is financed. |
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Non-current assets
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Assets that a business would still expect to own in a year or more's time to enable it to function e.g. machinery, vehicles |
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Non-current liabilities
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Debts, usually in the form of medium to long term bank loans that a business would still expect to owe in one year or more. |
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Current assets
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Assets that a business would expect to turn to cash within the next year or are already cash e.g. inventory (stock) or trade receivables |
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Current liabilities
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Debts a business would expect to have paid off within the next 12 months e.g. overdraft to a bank or trade payables to suppliers
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Trade receivables
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A type of current asset, as it is effectively a promise from a customer to pay for goods received within a certain period of time
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Trade payables
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A type of current liability, as it is effectively a debt to a supplier for goods/services already received. |
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Dividends
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A payment made to shareholders from profits made by the business |
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Liquidity
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Measures the ability of a firm to find the cash to pay its current liabilities using current assets |
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Working capital
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The amount of money available to a business to continue to trade after settling it's current liabilities. Calculated as current assets - current liabilities |
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Administration
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When directors of a business feel forced by the threat of insolvency (in ability to meet debts) to hand over control of the business to an administrator, usually an accountant, who may try to sell the business or close it down and sell off the assets
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Business model
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the underlying plan of how a business is going to make a profit in the long term |