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Keywords
Monitoring the Business
| Question | Answer |
|---|---|
| The Trading Account | Finds the gross profit or gross loss made by a business |
| Gross Profit | .. is the profit made by buying and selling goods before business expenses have been deducted. |
| Profit and Loss account | This shows the net profit or net loss made by the business after adding additional income and deducting all expenses. |
| Balance Sheet | This is a statement of the assets, liabilities and share capital of a business. |
| Working Capital | The money available for the day to day running of the business. |
| Overtrading | The business cannot pay its debts as they arise. |
| Ratio analysis | ..is used to interpret accounts and make them clear for the benefit of interested parties. |
| Profitability ratio | . shows how successful management was in making profit in the business |
| Gross Profit Margin | Shows how much gross profit was made from each €1 of sales |
| Net Profit Margin | Shows how much net profit was made from each €1 of sales |
| Return on Investment | Shows % return the firm is able to generate on the capital invested in the business |
| Liquidity | Ability of the business to pay its short term debts |
| Acid Test Ratio | Measures firms ability to pay its short term debts out of liquid assets. |
| Debt Equity Ratio | shows the financial structure of a business. |
| Debt capital | Long term debt provided by financial institutions in return for annual interest paid plus capital repayment on a specific date. |
| Equity capital | Ordinary shares and retained earnings (reserves) and belongs to the owners of the business. |
Created by:
bccns business
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