Recap Cash Flow Cash in or Cash Out

Re-cap: Cash Flow Cash in or Cash Out (Interactive Game) http: //www. businessstudiesonline. co. uk/live/i ndex. php? option=com_content&view=article &id=35&Itemid=23

UNIT TITLE: LESSON TITLE: Unit 3: Accounts & Finance Balance Sheet COMPETENCY FOCUS: Key Skills (L 5): you will be able to develop your numeracy skills to calculate financial transactions of a business and to interpret financial data. Learning Objectives By the end of the lesson, you should be able to… LO 1) To describe the purpose of a balance sheet LO 2) To complete a balance sheet from information provided LO 3) To analyse financial statements for a small business and suggest appropriate actions that the business can take to succeed.

I can recognise the layout of the Balance Sheet, input data correctly and explain what the figures show: Competence level Descriptor Autonomous I can delve deeper into my calculations by fully explaining how my calculations explain the financial state of the business and I will evaluate how effective/ineffective their business activities have been for the organisation and make justified recommendations for improvement. Advanced As below but additionally I can use my calculations to begin to analyse the activities of my focus organisation and recommend strategies for improvement. Strong As below but additionally I can fully explain what the calculations show and explain the financial state of the business. Regular I can correctly input data into a balance sheet, calculate totals and then begin to explain what the calculations show. Guided Through basic calculations, I can input data correctly into a balance sheet.

Which one? ? ? Which of the following activities can make a business more successful? a) Analysing financial accounts b) Analyse financial information about competitors OR a) Reducing the company overdraft limit

What is a Balance Sheet? • A balance sheet records where the business got its money from and what it has done with it. The two balance out exactly! • It shows the value of all assets and capital on a particular date (last day of financial year – 31 st March)

Assets: All of the premises, machinery, equipment, stocks and cash owned by the business at a given time. Liabilities: The debts of the business Equity: The amount invested in the business.

MINI TASK For each of the following options, state whether they are an asset or a liability. Ipod Dog House DVD player Bank overdraft Mobile Phone Bill Pocket money/allowance Dishwasher

Fixed Assets Vs Current Assets Fixed Assets: Assets that are owned and are expected to be kept for more than 1 year or many years. Current Assets: Assets that can be converted in to cash more easily and are only retained for less than 1 year. These are listed in order of liquidity (easiest to convert in to cash)

Current Liabilities Current liabilities are bills the firm has to pay soon (within 1 year) Included in current liabilities is: -creditors (money owed to suppliers for stock) - Corporation tax (to Government) - Unpaid dividends to shareholders

Current Assets Net Current Assets(working capital) = Current Assets – Current Liabilities Net assets (what the company is worth) = Net current assets + fixed assets

What does this tell us about the state of the business?

TASK 1 Using the format of the previous balance sheet, construct a balance sheet for the following business: The following figures are taken from Rock Star Studio’s business accounts as at 30 June 2012. Fixed assets = £ 500, 000. Non-current assets = £ 260, 000 Current assets = £ 694, 500 Current liabilities = £ 375, 000 Non-current liabilities= £ 134, 000 The business is financed by £ 50, 000 share capital and £ 395, 500 retained profits.