The document analyzes and interprets the profit and loss statement of Lambdown Farms. It shows Lambdown Farms had a net profit of $13,100 from revenue of $100,000 in cash sales and expenses including $20,000 in wages and $3,000 in depreciation of a delivery van. It also compares Lambdown Farms' sales of $30,000 to Shepton Farms' sales of $60,000 to determine which farm is doing better. The document defines key terms related to financial analysis such as markup, expenses, cash payments, and various ratios.

1. Analysis and Interpretation Analysis means to break down something complex into workable segments $ $ $ $ $ $ $ $

2. Why analyse and interpret?

3. Lambdown Farms Profit and Loss Statement Revenue Cash sales 100000 less cost of goods sold cost of sales 60000 cartage in 1000 gross profit 39000 Less stock loss 1000 adjusted gross profit 38000 Less Expenses wages 20000 insurance 900 interest expenses 1000 depreciation of delivery van 3000 24900 net profit 13100

4. Lambdown Farms Fat lamb sales $30000

5. Shepton Farm Fat lamb sales $60000

6. Which farm is doing better? Shepton Farms Lambdown Farms

7. Sales Analysis Dollar changes Percentage changes Sales Index Budget targets Graphs and Charts

8. Which cash receipts = revenue? Capital contribution Loans taken out Cash sales Collections from debtors Interest recieved on investment

9. Which cash payments do not = expenses Drawings Loan Repayments Rent Advertising Payments to creditors Cash purchases of non-current assets Office expenses

10. Which expenses are not cash payments? Rent Depreciation of non-current assets Cost of sales Advertising Stock losses Drenches

11. What is a markup?

12. Nursery Stores Cost price of plants = $3 (50% markup) Cost of Wheelbarrows = $30 (30%markup) Cost of Bunches of flowers =$3 (100% markup)

13. Other ratios Gross profit ratios Net profit ratio Return on owner’s investment Stock turnover rate Debtors turnover ratio Cash cycle Liquidity ratios The gearing ratio

14. Non-financial analysis Independence Better life style Hours of work Development of products Increasing market share Staff development and growth