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SECTION 4: MEASURING FINANCIAL PERFORMANCE

23 Key terms in measuring financial


performance 1.
The phrases on the left are commonly used in considerations of the financial strength
of a company. Match each one to an appropriate explanation on the right. Use the
grid below. (See example):
1 company accounts
2 profitandlossaccount
3 balance sheet
4 opening balance
5 c10sing balance
6 capital expenditure
7 fixed assets
8 current assets
9 net sales
10 pre-tax profit
11 interest paid
a) The description of income and expenditure in a
specific accounting period.
b) Hems of value which are not easily changed into
cash but which the business needs.
c) Documents showing income, expenditure, assets
and liabilities, sales records, etc.
d) Major spending on large items necessary for the
business, such as property or equipment.
e) Cash items, or items that can easily be changed
into cash for the present financial year.
f) The amount of money held in cash or near cash
at the end of the accounting period.
g) The cost of borrowing from a bank.
h) Money made by the company, less all costs, but
before tax has been paid.
i) The amount of money held in cash or near cash
at the start of the accounting period.
j) The overall picture of assets and liabilities.
k) The profit from sales after direct costs have
been deducted.
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C.
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Section 4: Measuringfinancial performance
24 Key terms in measuring financial
. performance 2
Change the underlined words or phrases in the sentences below to other words or
phrases that have a similar meaning. Choose from the box.
abbreviated accounts equity liquid assets
capital investment extraordinary items operating income
consolidated gross revenue
debts
Unpredictable and exceptional costs should be aseparate item in the
financial report.
2 The trading income needs to increase each year so that the company can make
decisions to buy new plant and eguipment.
3 The company accounts have been checked and approved by an independent
financial expert.
4 Shareholders expect to see the short description of the company's
financial position.
5 Income during the present tax year is less than last year.
6 Pre-taxearnings are down.
7 The total value of a company once allliabilities have been paid.
8 A successful company needs property and investments that can be easily
converted into cash.
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Section 4: Measuringfinancial performance
cial
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The balance sheet


-.n make
Match the words or phrases on the left with the correct defintion (a-i). Use the grid
below. (See example):
intangible assets
2 fixed assets
3 liquidity
4 depreciation
5 current assets
6 dividend
7 liabilities
8 liquid assets
9 overdraft
a) The money paid to shareholders out
ofprofits.
b) Regular costs and money owed.
c) Any investments, cheques, bank
deposits, stock or work-in-progress
that can easily be converted into cash.
d) Assets which can be used to make
immediate payments.
e) Property, land and equipment which
is not normally intended for
immediate sale.
f) Brand names, patents, rights, trade
marks and licences which may be the
major part of a company's wealth.
g) The total amount borrowed from
a bank.
h) The ability of a company to pay
suppliers, employees, shareholders,
tax authorities, etc.
i) The notional fall in value of
equipment over time.
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f
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