Ratio Analysis
Measures the performance of a business
What is a profitability ratio?
what do you call the sale of new shares to existing shareholders at a discount.
Rights issue
True or false?
Net current assets and Capital employed are equal.
False
Some government legislation protects customers. One example is by preventing price fixing. What is price fixing?
When companies in the same industry agree together to one set price for a product/service, rather than setting competitive prices against one another. Price fixing often sets a price higher than it would be naturally if there was competition.
True or False: Markup= cost x mark-up percentage
False
What is long term finance?
Money borrowed for more than one year.
What is the difference between net assets and net current assets?
net current assets = current assets - current liabilities
net assets = all assets - all liabilities
Part of income that is not taxed
What are tax allowances?
What is the formula for acid test ratio?
(current assets-inventory/stock) รท current liabilities
What is the least popular source of finance?
Crowd funding
It is all the money that is owed to the owners.
what is shareholders equity?
What are infant industries?
new industries that are yet to be established or just starting
What does it mean for a business if their acid test ratio is 0.9?
It means their current assets minus the inventory aren't enough to cover their liabilities.
One disadvantage of trade payables
A business may be unable to pay back the money on time.
If a company's liabilities are $2399000 and its assets are $4500000.The value of capital will be?
$6899000
Describe one way an INCREASED interest rate could affect a business?
2) Customers may have less potential access to finance, and thus make less purchases
3) Customers may have to pay higher rates for example if they have a mortgage, and thus have less money to spend on less essential purchases