Finance 3.4

Balance sheet

A financial statement that outlines the assets, liabilities and equity of a firm at a specific point in time

Liabilities

A firm's legal debts or what it owes to another firms, institutions or individuals

Straight-line deprecitation

A method that spreads out the cost of an asset equally over its lifetime by deducting a given constant amount of depreciation of the assets value per annum

Reducing-balance depreciation

A method where a predetermined percentage depreciation rate is used and subtracted from the net book value of the previous year

Trademark

A recognizable symbol, word, phrase or design that is officially registered and that identifies a product or business

Dividends

A sum of money paid to shareholders decided by the board of directs of a company

Working capital

Also known as net current assets, helps establish where a firm can pay its day to day running costs

Equity

Also known as shareholders equity, shows how the net assets are financed using shareholders capital and retained profit

Profit and loss account

Also known as the income statement, shows the records of income and expenditure flows of a business over a given time period

Net book value

An assets net value at the beginning of an accounting period, calculated by deducting the accumulated depreciation from the cost of the fixed asset

Residual value

An estimation of an assets worth or value over its useful life, also known as scrap or salvage value

Net profit after interest and tax

Equal to net profit before tax less tax

Intangible assets

Fixed assets that lack physical substance or are non-physical in nature

Gross profit

Found by deducing cost of goods sold from sales revenue

Net profit before tax

Found by subtracting interest from net profit before interest and tax

Net assets

Found by subtracting long-term liabilities from total assets less current liabilities

Copyright laws

Laws that provide creators with the exclusive right to protect the production and sale of their artistic or literary work

Patents

Providing inventors with the exclusive rights to manufacture, use, sell or control their invention of a product

Assets

Resources of value that a business owns or that are owed to it

Retained profit

The amount of earnings left after dividends and other deductions have been made

Depreciation

The decrease in the value of a fixed asset over time

Net profit before interest and tax

The difference between gross profit and expenses

Costs of goods sold (COGS)

The direct cost of producing or purchasing the goods that were sold during that period

Goodwill

The value of positive or favorable attributes that relate to a business