Raw materials / work in progress / finished goods / packaging / other consumables.
Customers who owe the business money for goods /services supplied on credit.
Suppliers of goods / services to whom the business owes money.
An obligation to pay other than for the supply of goods / services, e.g. VAT / PAYE.
Non-cash working assets (stocks & debtors) less short term creditors (trade & others).
The value of good / services for which the business has received the benefit but not yet received an invoice (ESB, rent in arrears).
The value of goods / services for which you have paid in advance (insurance, rent in advance etc).
Accounts are prepared on the assumption that the business will continue as a going concern.
Accounting treatment will be applied on a consistent basis from year to year.
Accounts are prepared using cautious judgment and if in doubt to choose the option which minimizes profits.
Costs which can be traced directly to units of production.
Costs which cannot be directly traced to units of production.
Overheads which do not vary with volume of production or sales.
Overheads which are fixed only within a range of production or sales and vary outside this range.
Gross margin = Sales less Variable Costs.
Gross margin covers Fixed costs plus Profit.
Gross Margin Ratio = Gross Profit x 100 / Sales.
Break-even Sales = Variable Costs + Fixed Costs or Break-even Sales = Total Fixed Costs / Gross Profit %
The level of sales at which the business neither makes a profit or loss.
Costs which directly relate to the making and selling of the product / service.
The amount left over once cost of sales has been met out of sales value.
Costs which are not directly related to making and selling specific products / services.
Trade Debtors, Stock, Cash in the Bank.
Trade Creditors, Loans or amounts outstanding which must be paid within a year.
Working Capital is Current Assets minus Current Liabilities.
Watch Working Capital : Sales Ratio, which is Current Assets minus Current Liabilities divided by Sales x 100.
Debtor Days = Debtors divided by Gross Sales per Day.
Creditor Days = Trade Creditors divided by Gross Purchases per Day.
Stock Days = Stock divided by Net Purchases.
Debtors + Stock - Trade & Other Creditors = Working Capital Requirement.
Total Funding Requirement = Net Fixed Assets + Working Capital Requirement.
1. Authorised Share Capital is the aggregate par value of the shares that a company has authority to issue to its members, it is a kind of theoretical maximum capital. For example the authorised share capital of company A is 1,000,000 €1 shares.
2. Issued Share Capital is the aggregate par value of the shares that have been issued to subscribers , in other words the total par value of the company's shares that have been acquired by its members. Allotted capital is the same as issued capital.
3. Ordinary Shares are the voting shares of the company. There may be different classes of ordinary shares carrying different voting rights. For example a company may have "A" Ordinary Shares which carry full voting rights, and may also have a number of "B" Ordinary Shares which have restricted voting rights.
4. Preference Shares are shares that carry prior or preferential rights over other shares. The preferential rights are usually as regards dividends and return of capital.
5. Redeemable Preference Shares are a special class of shares issues at a coupon rate for a fixed period of time. The shares plus any unpaid dividends are repayable by the company at the end of the predetermined date. In effect the company is buying back its own shares.