IB Business management_Subunit 3.4 Final accounts and Subunit 3.5 Profitability and liquidity ratios

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Across
  1. 1. The possessions owned by a business, which have a monetary value, e.g., buildings, land, machinery, equipment, inventories, and cash.
  2. 3. A profitability ratio that measures a firm’s efficiency and profitability in relation to its size (as measured by the value of the organization’s capital employed).
  3. 5. These are the short-term debts of a business, which need to be repaid within twelve months of the balance sheet date. Examples include bank overdrafts, trade creditors, and other short-term loans
  4. 6. A short-term liquidity ratio used to calculate the ability of an organization to meet its short-term debts (within the next twelve months of the balance sheet date).
  5. 7. Short-term assets belonging to an organization which will last in the business for up to 12 months, e.g., cash, debtors, and stock (inventory).
  6. 9. These are the direct costs of production, such as the cost of raw materials, component parts, and direct labour.
  7. 12. A profitability ratio that measures a firm’s overall profit (after all costs of production have been deducted) as a percentage of its sales revenue. It is also an indicator of how well a business can manage its indirect costs (overhead expenses).
  8. 13. Also known as trade creditors, this refers to the suppliers that allow a business to purchase goods and/or services on trade credit.
  9. 15. Set of final accounts shows the value of a firm’s assets, liabilities, and the owners’ investment (or equity) in the business, at a particular point in time.
  10. 18. The debts of a business, i.e., the money owed to others, e.g., money owed to financiers, trade creditors, and the government (for tax).
  11. 20. The value of equity in a business that is funded by its shareholders, either through an initial public offering (IPO) or via a share issue.
  12. 21. A profitability ratio that measures an organization’s gross profit expressed as a percentage of its sales revenue. It is also an indicator of how well a business can manage its direct costs of production. Grossprofitmargin
  13. 22. A type of current asset, referring to individual or business customers that owe money to the organization as they have bought goods or services on trade credit, i.e., they need to pay within 30 and 60 days.
Down
  1. 1. Also known as the quick ratio, this short-term liquidity ratio measures an organization’s ability to pay its short-term debts without having to sell any stock (inventories).
  2. 2. The financial surplus after all costs, including expenses, have been paid.
  3. 4. Also referred to as retained earnings, this refers to the value of a firm’s earnings after all costs are paid (including interest and tax) and shareholders have been compensated (dividends).
  4. 8. Refers to the overall value of an organization’s assets after all its liabilities are deducted. It is calculated by the formula: total assets minus current liabilities minus non-current liabilities.
  5. 10. The long-term assets (possessions) of an organization that have a monetary value and are used repeatedly but are not intended for resale within the next twelve months, e.g. property and equipment.
  6. 11. These are financial ratios that examine an organization’s ability to pay its short-term liabilities and debts, namely the current and acid test ratios.
  7. 14. This is the value of the funds used to operate the business and to generate a financial return for the organization. It is the sum of non-current assets and equity finance.
  8. 16. Refers to the ease with which a business can convert its assets into cash without affecting its market value, i.e., it measures a firm’s ability to repay short-term liabilities without having to use external sources of finance.
  9. 17. A quantitative management planning and decision-making tool, used to analyse and evaluate the financial performance of a business. These can be further categorised as profitability, liquidity, and efficiency ratio analysis.
  10. 19. These are the payments from a company’s profit (after interest and tax) paid to the shareholders (owners) of the company. The amount of dividends paid to an individual shareholder depends on the number of shares held by the individua