Unit 2: Financial Statements and Ratios

Operating income

Money earned from a company’s normal activities, not including exceptional items.

Depreciation

The gradual loss in value of a fixed asset that wears out over a number of years or needs to be replaced regularly.

Goodwill

The value that a company has in addiction to its assets, such as a good reputation with its customers.

Dividend

A part of the profits of the company for a particular period of time that is paid to shareholders for each share that they own.

Operating profit

Profit relating to a company’s normal activities of providing goods or services, before tax is deducted.

Operating expense

Costs relating to a company’s normal activities of providing goods or services.