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Business Chapter 25: Statement of Financial Position - Coggle Diagram
Business Chapter 25: Statement of Financial Position
statement of financial position terms
non-current assets
current assets
current liabilities
non-current liabilities
shareholders' equity
interpreting statement of financial position data
shareholders can see if they have increased or fall in value
by looking at total equity
can also analyse how expansion has been paid
increase non-current liabilities
from retained profits
by increasing share capital
working capital is the net current assets
working capital = current assets - current liabilities
no business can survive without working capital
used to pay short-term debts
if they cannot pay back debts, business can be forced to trade
capital employed can be calculated from the data
capital employed = shareholders' funds + non-current liabilities
can be used to calculate ratios for assessing business performance
explanations
total assets - total liabilities = total equity
shareholders' equity is the total sum of money invested to the business
by share capital; putting money in the business when they bought newly issued shares
reserves arise for a number of reasons
profit and loss reserves are retained profits from current and previous years
profit owned by the shareholders but has not been paid out in the form of dividends
kept in the business as shareholders' funds
the statement of financial position
assets = items of value owned by the business
liabilities = items owed by the business
shareholders' equity: money invested into the business by the owners