Balance Sheet
Resources owned by a business that have economic value
Assets
Revenue minus cost of goods sold
Gross Profit
Balance sheet
Total Assets = Liabilities + Equity
Liquidity ratio
Total liquid assets / Total current debt
Unemployment, health issues, disability, and death.
Loss of income
Debts or obligations owed by a business
Liabilities
Profit remaining after all expenses have been deducted
Net Profit
Working capital
Current Assets - Current Liabilities
Return on assets
Net income / Total assets
Higher expenses than budgeted or emergency expenses.
Unexpected expenses
The owner’s claim on the business after liabilities are deducted from assets
Equity
Expenses related to the sale of goods
COGS
Net Income
Revenues - Expenses
Cash Flow
Income - Expenses
decline in the value of investments, damage or theft.
Assets or investments
The ability of a business to meet long-term obligations
Solvency
revenue < expenses
loss
Current ratio
Current Assets ÷ Current Liabilities
Break-even point
Sales – Fixed Costs – Variable Cost = $0 profit
Unable to pay debt
Debt financing
The ability of a business to meet short-term obligations
Liquidity
3 types of expenses
electricity, wages, tax, etc
Acid test/ Quick ratio
(Current Assets - Inventory) ÷ Current Liabilities
Profit Margin
Net Income ÷ Sales
Losses made by an internal source
Operational