Bright Sparks · Accounts explained
Accounts explained
How to read a UK company's accounts, one line at a time.
Every UK company files its accounts at Companies House, free for anyone to read. These guides explain what each figure means, worked through with the real filed accounts of companies you know.
The series
Turnover vs profit
What is the difference between turnover and profit?
What a company takes in, and what is left after its costs.
2 of 10Operating profit vs pre-tax profit
Why can pre-tax profit be far bigger than operating profit?
Where interest, dividends and one-offs come in.
3 of 10What is EBITDA?
What is EBITDA, and why do companies quote it?
The profit figure that is not in the statutory accounts.
4 of 10Profit margin
What is a profit margin, and what counts as a good one?
How much of every £100 of sales is left as profit.
5 of 10Reading a balance sheet
How do you read a balance sheet?
What a company owns, what it owes, and net assets.
6 of 10Net debt and borrowings
What is net debt?
Borrowings, less the cash in the bank.
7 of 10Cash vs profit
Why can a profitable company run out of cash?
Profit is an opinion, cash is a fact.
8 of 10Group vs company accounts
What is the difference between group accounts and company accounts?
Why the same business can show two sets of figures.
9 of 10What each company has to file
What accounts does a UK company have to file at Companies House?
Micro, small, medium and large: who shows what.
10 of 10Going concern
What does "going concern" mean in a set of accounts?
The warning that a company may not last the year.