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  • 12 Business Revision W8

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    Isaac Busch
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    This document contains instructions for calculating financial metrics from a company's balance sheet and income statement. It asks the reader to: 1) Calculate retained profit and current/debt-to-equity ratios from the balance sheet, 2) Calculate gross and net profit from an income statement where revenue and cost of goods sold are missing, and 3) Discuss the role of debt financing, conflicts between short and long-term objectives, and ways to improve working capital.

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    This document contains instructions for calculating financial metrics from a company's balance sheet and income statement. It asks the reader to: 1) Calculate retained profit and current/debt-to-equity ratios from the balance sheet, 2) Calculate gross and net profit from an income statement where revenue and cost of goods sold are missing, and 3) Discuss the role of debt financing, conflicts between short and long-term objectives, and ways to improve working capital.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    4 views3 pages

    12 Business Revision W8

    Uploaded by

    Isaac Busch
    This document contains instructions for calculating financial metrics from a company's balance sheet and income statement. It asks the reader to: 1) Calculate retained profit and current/debt-to-equity ratios from the balance sheet, 2) Calculate gross and net profit from an income statement where revenue and cost of goods sold are missing, and 3) Discuss the role of debt financing, conflicts between short and long-term objectives, and ways to improve working capital.

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    © All Rights Reserved
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    Flag for inappropriate content
    of 3

    Balance Sheet

    *Calculate retained profit

    1. Role of financial management


    2. Calculate retained Net Profit
    3. Calculate current ratio (CA/CL) ?:1
    4. Calculate debt to equity (TL/TE) ?:1
    5. Discuss TWO ethical issues related to financial reporting (6 marks)

    Revenue Statement
    *Not give Gross Profit or Net Profit figures → need to work that out. Also, COGS not given → need to calculate this.

    1. Outline ONE objective of financial management

    2. Calculate Gross Profit (Sales - COGS)

    3. Calculate Net Profit (Gross Profit - Expenses)

    4. Explain the importance of income statements for managers of a business (3 marks)


    5. Describe TWO Profitability strategies used by a business you have studied to improve its Net Profit in
    recent times (4 marks)

    1. Provide ONE advantage and ONE disadvantage of using debt as a source of finance
    2. Explain ONE conflict between short term and long term financial objectives (3 marks)

    3. Outline TWO ways a business could use to improve Working Capital (4 marks)

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