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Financial documents - Coggle Diagram
Financial documents
Statement of comprehensive income/income statemnnt
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Parts of the chart
operating expenses
Indirect expenses necessary for day-to-day business operations
exp: rent, office supplies
Operating profit
Profit made after the operating expenses have been subtracted
Gross profit-operating expenses = operating profit
gross profit
The profit made after deducting the cost of sales
Revenue-cost of sales = gross profit
Other financial expenses
Other expenses the business has
exp: taxes, interest payments
Net profit
The total profit after all the expenses have been deducted
Cost of sales
The cost of producing the product you sell
Variable cost per unit x quantity sold
exp: cost of coffee beans, cost of beaking powder
Revenue
The money a business has made through sales
quantity sold x selling price
Uses and limitations
limitations
Manipulation of gains or losses can be manipulated
Does not reflect current financial situation
Doesn't take in account money which the business has in assets or the debts it has in liabilities
Uses
Identify sectors where the business can improve
Identify any problems in the business financial state
A way to observe the company's financial wealth
Statement of financial position/balance sheet
Assets and liabilities
Assets
items that are owned by a business
There are 2 type of assets
current
Assets that remain in a business for less than a year
cash in bank, trading stock
non-current
Assets that remain in the business for more than a year
exp: land, machinery
Liabilities
Items that are owed by a business
There are 2 types of liabilities
current
Short term financial obligations that the business must pay in less than a year
exp:bank overdrafts, trade payables
non-current
Money which the business owes that are due to repay in more than a year
exp:long term loans or mortages
Equity
The amount of capital invested or owned by a company
represents the total amount of money a business owner or shareholder would receive if they liquidated all their assets and paid off the company's debt.
Assets= equity + liability
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Uses and limitations
Uses
To asses the comapny's financial health
To know what the business owes
SAupport management to make a good financial decision
Limitations
INcomplete financial information
Easy manipulation