Value and Limitations (AQA A-Level Business): Flashcards
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Practise the cards
10 cards from this deck
2 documents financial analysis examines
2 documents financial analysis examines
Balance sheet and income statement
Benchmarking definition
Benchmarking definition
Comparing business performance against others
Value of trend analysis
Value of trend analysis
Shows direction business is heading, not just current position
Fundamental limitation of financial analysis
Fundamental limitation of financial analysis
Only captures numerical data, misses qualitative factors
Internal qualitative factors missed (3 examples)
Internal qualitative factors missed (3 examples)
Staff quality, customer satisfaction, market share
External factors not in financial statements
External factors not in financial statements
Economic conditions, competitor actions, legislation
Balance sheet time limitation
Balance sheet time limitation
Past snapshot, not predictive of future
Intangible assets balance sheet doesn't value
Intangible assets balance sheet doesn't value
Staff skill, motivation, management experience
How inflation affects income statements
How inflation affects income statements
Distorts revenue value; growth may just be inflation
Income statement manipulation example
Income statement manipulation example
Bringing forward sales from next period to current period