Understanding the numbers correctly is crucial if you are going to make any decisions involving the financial position of your business. Effective business planning is useless without it. However, many people feel uncomfortable with just simply punching in numbers into a calculator. Uncertain at this point if they’ve got this right, they are then often [...]
Understanding the word CAPITAL
The word CAPITAL can be used in many different contexts in a financial discussion. You need to know exactly in which context it is used if you are to make any sound judgements. It can be used on its own e.g. the business ‘capital’ or in phrases such as ‘capital investment’ or ‘working capital’ and [...]
Balance Sheet Defined
Balance Sheet – is a key financial document which helps users to assess the financial health and performance of a business. It shows a summary of everything the company owns (Assets), all the debts the company has to payout (Liabilities) and the amount of money that has been invested in the organisation by the owners [...]
Price Earnings Ratio’s
Defined as ‘A valuation ratio of a company’s current share price compared to its per-share earnings.’ Calculated as: Market Value per Share Earnings per Share (EPS) For example, if a company is currently trading at £40 a share and earnings over the last 12 months were £2.10 per share, the P/E ratio for the stock [...]
