Business Studies

• • When the current assets subtotal is compared to the current liabilities subtotal, investors can estimate whether a firm has access to sufficient funds in the short term to pay off its short-term obligations i.e., whether it is liquid
• • One can compare the total amount of debt to the total amount of equity listed on the balance sheet, to see if the debt-equity ratio indicates a dangerously high level of borrowing. This information is especially useful for creditors, who want to know if the firm will be able to pay back its debt
• • Investors can examine the amount of cash on the balance sheet to see if there is enough available to pay them a dividend
• • Managers can examine its balance sheet to see if there are any assets that could potentially be sold off without harming the underlying business.
• accounts are the financial records of a firm's transactions
• income statement is a document that records all business' income and all costs incurred to earn that income
• gross profit is made when sales revenue is greater than the cost of goods sold
• sales revenue is the income to a business during a period of time from the sales of goods or services
• cost of goods sold is the cost of producing or buying in the goods actually sold by a business during a time period
• Net profit is the profit made after all costs have been deducted from SR
• Retained profit is the net profit reinvested back into the company, after deducting tax and payments to owners, such as dividends