Finance unit business

Income Statement

A financial statement showing the revenue and expenses for a fiscal period.

Revenue

Incoming money.

Expenses

The cost required for something; the money spent on something.

Cost of Goods Sold

The amount of money a firm spent to buy or produce the products it sold during the period to which the income statement applies.

Operating Expenses

Costs involved in operating a business, such as rent, utilities, and salaries.

Profit

A financial gain, especially the difference between the amount earned and the amount spent in buying, operating, or producing something.

Balance Sheet

A financial statement that reports assets, liabilities, and owner's equity on a specific date.

Asset

Anything of value that is owned.

Liability

An amount owed by a business.

Owner's Equity

The owner's claims to the assets of the business.

Accounting Equation

Assets = Liabilities + Equity.

Current Assets

Cash and other assets expected to be exchanged for cash or consumed within a year.

Fixed Assets

Long-term assets that are relatively permanent such as land, buildings, or equipment.

Current Liabilities

Obligations that a company expects to pay within the next year or operating cycle, whichever is longer.

Long-term Liabilities

Liabilities owed for more than a year.

Profit Margin Ratio

A ratio that measures how much of a company's revenue from selling a product stays in the company as profit.

Asset Utilization Ratios

Ratios that measure how well a firm uses its assets to generate each $1 of sales.