Snapshot of a firm's finances at a fixed point in time
Statements of Financial Position
Show the value of all the business's assets (the things that belong to the business, including cash in the bank)
Show all the business's liabilities (the money the business owes)
Show the value of all the capital (the money invested in the business)
Show the source of that capital (e.g. loans, shares or retained profits)
Net assets value
Total fixed and current assets minus total current and non-current (long-term) liabilities
Net assets value
Always the same as the total equity value (the total of all the money that's been put into the business)
Statements of Financial Position can also be called balance sheets because they balance
Financial factors that can cause business failure
Economic recession can result in consumers having less disposable income, which may reduce sales
A change in exchange rates can have huge effects - e.g. firms in the UK would offer cheaper prices than firms inside the UK, increasing demand for imports which could lead to a fall in the demand for domestic products
Current assets are assets that businesses is likely to exchange for cash
Non current assets- are assets that a business is likely to keep for more than a year such as factories