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    Finance Revision Questions & Summary

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    knoxbusiness
    This document provides an overview of key concepts in finance and accounting. It outlines the purpose of financial statements like the profit and loss account, balance sheet, and cashflow statement. It also defines ratio analysis and lists common profitability, liquidity, and efficiency ratios. The document explains that financial information is used by various internal and external groups for purposes like decision making, investment analysis, and performance evaluation. It emphasizes practicing past exam questions to test understanding of concepts and requesting help for difficult topics.

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    Finance Revision Questions & Summary

    Uploaded by

    knoxbusiness
    135 views2 pages
    This document provides an overview of key concepts in finance and accounting. It outlines the purpose of financial statements like the profit and loss account, balance sheet, and cashflow statement. It also defines ratio analysis and lists common profitability, liquidity, and efficiency ratios. The document explains that financial information is used by various internal and external groups for purposes like decision making, investment analysis, and performance evaluation. It emphasizes practicing past exam questions to test understanding of concepts and requesting help for difficult topics.

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    HBM Finance Revision Qs and Summary

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    This document provides an overview of key concepts in finance and accounting. It outlines the purpose of financial statements like the profit and loss account, balance sheet, and cashflow statement. It also defines ratio analysis and lists common profitability, liquidity, and efficiency ratios. The document explains that financial information is used by various internal and external groups for purposes like decision making, investment analysis, and performance evaluation. It emphasizes practicing past exam questions to test understanding of concepts and requesting help for difficult topics.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    135 views2 pages

    Finance Revision Questions & Summary

    Uploaded by

    knoxbusiness
    This document provides an overview of key concepts in finance and accounting. It outlines the purpose of financial statements like the profit and loss account, balance sheet, and cashflow statement. It also defines ratio analysis and lists common profitability, liquidity, and efficiency ratios. The document explains that financial information is used by various internal and external groups for purposes like decision making, investment analysis, and performance evaluation. It emphasizes practicing past exam questions to test understanding of concepts and requesting help for difficult topics.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
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    Finance Revision Questions & Summary

    1 What four main areas does financial information cover?

    2 List some of the factors which may be taken into account when one
    business deciding whether or not to provide a line of credit.

    3 For what purpose might a manager use financial information?

    4 List at least four characteristics of useful information.

    5 List at least five users of financial information.

    6 Using the users of financial information that you have just listed, suggest a
    reason for each of them to be using the information.

    7 Why might an organisation be interested in calculating accounting rations?

    8 Name and describe the purpose of four accounting rations.

    At the end of this unit you should be able to:

     The role of the finance function in an organisation including:


    a) payment of wages
    b) payment of accounts
    c) maintenance of financial records

     the purpose and use of:


    a) profit and loss account
    b) balance sheet
    c) cashflow statement

     the main uses of financial information

     the main users of financial information and the reasons for use

     ratio analysis

     budgets are statements showing future expenditure; a management tool;


    useful for monitoring and controlling business operations

     they are also useful for gaining information, setting targets and
    delegating authority

     a cash budget is a good example of a budget

     budgets are most easily used when created using a piece of appropriate
    computer software

     accounting ratios can be calculated for any business that produces


    financial reports

    Higher Grade Business Management Knox Academy


     ratios are normally calculated to highlight the areas of profitability,
    liquidity and efficiency

     the use of accounting ratios has limitations

     the main profitability ratios are:


    a) gross profit as a percentage of sales
    b) gross profit as a percentage of cost of goods sold
    c) net profit as a percentage of sales

     the main liquidity ratios are:


    a) current ratio
    b) acid test ratio

     the main efficiency ratio is:


    a) return on capital employed

     calculation of ratios is not enough; analysis must also take place

     analysis of ratios may include comparisons over a number of years or


    comparisons with other businesses in the same sector

     useful financial information should cover the areas of profitability,


    liquidity, efficiency and capital structure

     financial information becomes more useful when it is used as a


    comparator

     useful financial information has certain characteristics

     the users of financial information are a varied group

     users of financial information have many reasons for showing an interest


    in a company’s financial statements

    Keep studying for your NAB and final exam.

    Remember to practise past paper questions and ask for help in difficult
    areas.

    Higher Grade Business Management Knox Academy

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