This is a summary of section 3.5 of the Pearson Edexcel A-Level Business syllabus. The notes are organised according to the syllabus, split up under the headings: Interpretation of Financial Statements; Ratio Analysis; and Human Resources. Each section has a table of key terms with their definition...
3.5.1 – Interpretaton of Financial Statements
Financial statements Formal records that summarise a business’ fnancial
performance, actiites and worth oier a specifc period of tme
Statement of A formal fnancial document that summarises a business’
comprehensiie income trading actiites and expenses to show whether the business
has made a proft or a loss in a giien period of tme
Gross proft Proft after cost of sales has been deducted and before
expenses
Cost of sales The direct costs relatng to the quanttt sold in a giien period of
tme
Operatng proft Proft after all other expenses haie been deducted
Proft for the tear Proft after account has been taeen of exceptonal items and
after interest has been added or deducted but before the
patment of tax
Statement of fnancial A formal fnancial document that summarises the net worth of
positon a business at a giien point in tme
Non-current assets Items of ialue owned bt a business that are lieelt to be eept bt
the business for more than one tear
Current assets Items of ialue owned bt a business, lieelt to be turned into
cash within a tear
Current liabilites Monet owed bt a business that is to be repaid in the short
term, normallt one tear
Non-current liabilites Debts i.e. monet that the business owes that it has more than
one tear to repat e.g. long-term bane loans
Net assets The net worth of a business shown bt the balancing of assets
against liabilites
Total equitt The ialue of shareholders’ funds, made up of share capital plus
retained proft
Statement of Financial Positon
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