Analysing the financial performance of a business revision notes

A set of documents – the income statement, balance sheet and cash flow statement – that summarise a business’s financial performance and position over a specific period.

The income statement shows a business’s revenues, costs, and profits over a specific period.

An asset is a resource owned by a business that is expected to provide future economic benefit.

A financial statement that lists a company's assets, liabilities and equity as of a specific date.

Revenue minus cost of goods sold (COGS).

ROA is a profitability ratio that measures how efficiently a company uses its assets to generate profit.

The percentage of revenue that remains after deducting the cost of goods sold. It is calculated as (Revenue – Cost of Goods Sold) ÷ Revenue × 100.

The percentage of revenue that remains as net profit after all costs have been deducted.

Revenue minus cost of goods sold, expressed as a percentage of revenue.