# Assessing Competitiveness 3.5 Flashcards

in an income statement what is the order of the 7 subheadings which need to be calculated?

- revenue
- cost of sales
- gross profit
- overheads
- operating profit
- finance costs
- profit before tax

what is revenue?

money generated from sales

what is cost of sales?

direct costs of manufacturing

what is finance costs?

interest from borrowing

what is the formula of gross profit?

revenue - cost of sales

what is the formula of operating profit?

gross profit - overheads

what is the formula for profit before tax?

operating profit - finance costs

is a brand a tangible or an intangible asset?

an intangible asset

on a balance sheet what is the order of the 8 subheadings which need calculating?

- non current assets
- current assets
- current liabilities
- net current assets
- non current liabilities
- net assets
- share capital & reserves
- total equity

what are non current assets?

long term assets e.g. a building. also a brand

what are current assets?

something you own to turn into cash - e.g. stock

what are current liabilities?

short term debts who you owe to creditors

what is the calculation for net current assets?

current assets - current liabilities

what are non current liabilities?

a long term loan - e.g. a mortgage

what is the calculation for net assets?

non current assets+ net current assets - non-current liabilities

what are share capital and reserves?

where the money comes from

what is the calculation for total equity?

share capital + reserves

what is the total equity supposed to equal?

the net assets

what is another name for the statement of comprehensive income?

a profit and loss account

what is another name for the statement of financial position?

a balance sheet

what do published accounts allow an analyst to find out? (4)

- the amount of cash or near cash the company holds in its bank accounts
- how the cash total compares with short term liabilities
- how much of the firms long term capital is in the form of debt
- how profitable the business is

what do balance sheets help bankers to decide? (3)

- to invest in the business
- lend it some money
- buy the organisation outright

is it PLCs or LTDs which have to publish the two financial statements?

PLCs - public limited companies

what are the three main types of current assets?

- inventories - value of all stock a firm holds
- receivables - sums owed by customers who have bought items on credit
- cash

what is the definition of corporation tax?

a tax levied as a percentage of a companies profits

what is the definition of cost of sales?

all the costs arising from sales to customers, including raw materials, supplies and packaging

what is the definition of dividends?

regular payments to shareholders as a reward for their investment

what is the definition of gross profit?

profit made on trading activities

what is the definition of a liability?

a debt (a bill which has not been paid or a loan that has not been repaid)

what is the definition of liquidity?

a measurement of a firms ability to pay back its short term bills

what is the definition of operating profit?

gross profit minus expenses

what is the definition of reserves?

a companies accumulated, retained profit. It forms part of the firms total equity

what is the calculation for gross profit margins?

(gross profit/ sales) x100

what is the calculation for operating profit margins?

(operating profit/sales) x100