The following set of accounts represents the set of documents published by a fictional company.
|Balance sheet - Forlorn Sails plc as at 28th May 2011 ($'000's)|
|2,100||Plant and equipment||2,300|
|(100)||Net current assets||500|
|Long term liabilities|
|Capital and Reserves|
|500||Share premium account||500|
|Profit and loss account - Forlorn Sails plc - year ended 28th May 2011 ($'000's)|
|13,000||Cost of goods sold||14,500|
|1,650||Net profit before interest and tax||2,100|
|500||Net profit after interest and tax||700|
Be warned of a possible confusion in the balance sheet. Net assets is considered by the IB (and other examining boards) to mean the same as assets employed. The definition is therefore given by the formula:
Net Assets = ** Fixed assets plus net current assets (FA + [CA -CL])
However, in published company accounts, long-term liabilities are deducted, making net assets mean the same as net worth (shareholders' funds)
Net Assets = Fixed assets plus net current assets less long-term liabilities
(FA + [CA - CL] - LTL)
If you use this term or they are used in presented accounts in papers or the case study, make sure you are in tune with the IB presentation from the guide.
We will use net assets in the topic to represent assets employed (FA + [CA -CL]).