6 Finance Business insight Starlight in Coventry Susie West runs Starlight, one of Coventry's most popular nightclubs. Starlight has two bars and a large dance floor. Susie runs her business as

a private limited company and her mai business objective is to make profits. Her accountant is preparing her income statement for last year. This is shown below, with her income statement for the year before. Sales revenue Cost of sales Gross profit Overheads Operating profit Tax and interest payments Net profit Last year £ 940,200 438,130 502,070 225,500 276,570 98,425 178,145 The year before last £ 2939,125 vd ble 434,050 505,075 247,925 257,150 101,100 156,050 db Table 6.6 Starlight Ltd's income statement Susie thinks that, looking at the two income statements, Starlight's financial performance was better last year than in the year before last. 314 Use the income statement in Table 6.6 to analyse one reason why Susie thinks that Starlight's financial performance was better last (6 marks) year than in the year before last. 390 Components of the statement of financial position 3950 mms bris 19 190w 1911 A statement of financial position sets out the assets and liabilities that a business has on a particular day (see Figure 6.12). It shows where a business's finance has come from and how the business has spent the money that it has raised. It shows this financial information for a business on a particular day. It thus provides a snapshot of the business's financial position. ed ever DISE We shall consider the structure of statements of financial position as used by companies. Sole traders and partnerships prepare statements of financial position slightly differently. A statement of financial position is sometimes called 'balance sheet'. A company's statement of financial position will contain the following information about the business. Revenue Minus Cost of sales Gives Gross profit Minus Overheads 3.7 Jer Givesoubong to 21200 = Operating profit 5.2 Tax and interest Example (£ millions): 25.0 Gives 16.1 Minus ont ewode 110 g 8.9 Net profit Figure 6.11 Basic structure of an Vincome statement Teslse to J200 to Key term 2.7 = agpivise bris abung 2.5 Operating this ship results in many costs that will appear on the business's income statement. The cost of food for passengers, the cost of fuel for the engines and the crew's wages will all be included ges cost of sales. However, the cost of asuring the ship and the cost of maintaining top condition will be overheads. oog mel titong A liability is a sum of money that is owed by a business to another business or an individual.