Content 7

• statement of financial position

  • legal document required to make by ltd & plcs
  • shows how much a business is worth
  • what does a business owe & own
• assets

  • own
• liabilities

  • owe
• non current assets (long term)

  • land/building
  • machinery/equipment
  • vehicles
  • Intangibles- copyrights and patents
• current assets (used or turned to cash within a year)

  • inventory
  • receivables (debtors)
  • cash
• non current liabilities (long term)

  • retained/reserved profits
  • share capital
  • loans (payments due after a year)
• current liabilities (within a year)

  • payments within a year
  • short term creditors
  • loans due within a year
  • bank overdraft
• ROCE


  How efficient a business manages its finance
• How can inventory turnover increase

  • Sell-off or dispose of slow-moving or obsolete inventory
  • Introduce lean production techniques to reduce amounts of inventory held
  • rationalise the product range made or sold
  • Negotiate sale or return arrangements with suppliers – so inventory can be returned if it does not sell