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, esp. 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 companies 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