what is the statement of comprehensive income (SOCI)
This document shows if the business has made a profit or a loss
during the year
This is part of the
legal documents that must be published each year by ltd or plc
companies.
what’s the information you would find on the SOCI
Sales Revenue
Cost of sales
Gross profit
Expenses
Operating profit
Stakeholder interest in SOCI
Shareholders – want to know
the final profit figure which
dividends will be paid out on
Investors – want to know the
profitability of the business – is
it worth investing or will it be a
risk?
Employees and managers – may
wish to know the expenses of
the business
what is the statement of financial position (SOFP)
shows what the business owns and owes on one day of the year.
what infomoration would you find on the SOFP
Current assets
Non-current assets
Current liabilities
Long-term liabilities
stakeholder intrest in SOFP
Governments will use the financial information to calculate the
amount of tax (VAT and corporation tax) that a company has to pay
Shareholders will analyse the accounts and decide whether their
investment capital is being used effectively
Directors and senior managers will use the accounts to assist their
medium and long-term planning
Potential investors will analyse the accounts to determine whether
or not the company would make a good investment
Creditors will use the accounts to ascertain the company’s ability to
pay their bills
what is ratio analysis
a quantitative method of gaining insight into a company’s liquidity, operational efficiency, and profitability by studying its financial statements such as the statement of financial
position (SOFP) and the statement of comprehensive income (SOCI).
what are the limitations of ratio analysis
The Statement of Financial Position
(SOFP) or balance sheet is just a
snapshot of the business on one day, if
the ratios are based on this figure,
then it’s a ratio of just one day in the
business and as markets are dynamic
figures could change
Ratios must be seen in an industry
context. In some supermarkets the
current ratio is very low as the
stock is sold so fast , so a low
current ratio or acid ratio would
not be a worry
what is labour productivity
Productivity is the output per worker in a time period
what is labour turnover
Labour turnover measures the rate at which employees leave the
business in a 1 year period
what is Absenteeism
non-presence of an employee at his or her job.
reasons for some firms having high absenteeism
job dissatisfaction
low motivation
poor working conditions
how can absenteeism be improved
job enlargement
job rotation
job enrichment
attendance pay schemes
actions that provide workers a high incentive to come into work
