A look at the income statement and statement of financial position with diagrams and examples.
User of Financial Data both internal and external.
How to calculate gross profit, cost of sales and net profit.
How to evaluate an income statement.
The assets and liabilities of a company.
Accounts are statements that contain financial information about the business.
Employees
The two main types of financial accounts:
Internal
Income Statement: Summarises income/expenses and Managers
details the profits/losses made by the Owners
business in the accounting period.
Users of financial
Statement of Financial Position: Information Government
Details in summary format, the Local community
financial positions of the business.
Bank Suppliers
External Competitors
Customers
Media
Future Investors
Users of Financial Data:
Shareholders - I.S. Profit their investment has earned.
Earnings per share + dividends per share.
Level of remuneration.
Growth on previous years.
Employees - I.S. Level of profit - gain a higher wage.
Examine directors pay + accounts.
LT company future.
Managers - I.S. Profit + performance.
Break even analysis - aid decision making.
Compare growth turnover of their own department.
Suppliers - S.F.P Level of liquidity.
Business - plenty of cash - paid on time + in full.
Lenders: S.F.P Business accounts - business liquidity position.
Gearing position - assess risk in lending more money +
repayment likelihood.
Interested in collateral -> fixed assets in the balance sheet.
Customers View business accounts - assess continuity of supply and
stability - paying in advance.
Competitors Accounts - compare and reinforce superiority or benchmark.
Pressure Groups Trade Unions - members treatment.
Annual increase in wages.
Career opportunities.
The Media Expose scandalous behaviour.
Media latch on to profit increase + the pay awards of senior
directors.
The Government Review business accounting information.
Economic Output - complete statistics.
Inland revenue - calculate income tax, corporation tax,
capital gains.
Customer + excise - VAT purpose.
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