SUMMARY GROUP BALANCE SHEET

AUDITED for the year to March 31, 1998

£ million
The Group's fixed assets comprised:
Our fleet:	7,227	6,337
Property:	1,181
Computers, ground and other equipment:
Investments in other businesses:
Added together these represented total fixed assets of:	9,055	8,272
Our current assets, mainly money we are owed, our 'cash-in-hand' and stock, represented:	2,245	2,164
Most passengers book and pay for tickets in advance. This money, and amounts owing to creditors that are payable within one year, totalled:	(2,821)	(3,160)
Deducting this gave us net current liabilities of:	(576)	(996)
Adding this to the total fixed assets left us with total assets less current liabilities of:	8,479	7,276
In addition, we owed to creditors amounts due after more than a year including:
Long-term borrowings of:	(4,978)	(4,034)
We have also made provision for other liabilities and charges:	(180)	(284)
We also had contributions from a minority shareholder in one of our subsidiaries of:	–
Thus our assets less liabilities represented:	3,321	2,984
The money invested in the British Airways Group comprised:
Our share capital, some 1,038.9 million 25p shares:
Our reserves:	3,061	2,733
	3,321	2,984

A. Understanding main points

1. Mark these statements T (true) or F (false) according to the information in the profit and loss account. Find the part of the text that gives the correct information.

a) The total Group turnover increased slightly on the previous year. b) Salaries paid to employees are part of the operating costs. c) Interest payable on loans is deducted from the profit after tax.

d) British Airways sold off some of its assets in 1998. e) All the profit is distributed to shareholders. f) Earnings per share were lower than in the previous year.

2. Mark these statements T (true) or F (false) according to the information in the balance sheet. Find the part of the text that gives the correct information.

a) The airline's fixed assets included aircraft.

b) The company had acquired new aircraft since the previous year.

c) The amount of current assets was greater than the amount of current liabilities from assets.

d) Net current liabilities are calculated by deducting current liabilities from total assets.

e) British Airways had issued more than a billion shares at the time of publishing these accounts.

f) British Airways had increased its reserves since the previous year.

Vocabulary tasks

A. Key terms

Match these terms with their definitions.

1. turnover 2. operating costs 3. operating profit 4. depreciation 5. fixed assets 6. dividend 7. current assets 8. creditors 9. current liabilities 10. share capital 11. reserves

a) amount deducted each year from profits to allow for the fact that assets (e.g. equipment) lose their value as they get older b) total sales during a trading period c) people the company owes money to, e.g. suppliers d) past profits not paid out as dividends but retained in the business e) short-term assets used in operations, e.g. cash, items held in stock f) money which shareholders have put into the business g) long-term assets owned by the company, e.g. buildings, machinery h) expenses of running a business including salaries, rent, etc. but not including the direct costs of manufacturing i) result of deducting the operating expenses from turnover j) part of a company’s profits paid to shareholders k) debts that must be paid within one year

B. Other terms

The terms below were not used in the British Airways financial data, but are often found in balance sheets. Do you know what they mean?

1. debtors

2. long-term loans

C. Complete the sentence

Use an appropriate word or phrase from the list to complete the text below.

was earned allowed added to this

comprised deducting this overall

amounted to left totalled

Income from sales	50,000
Income from consultancy	2,500
Total:	52,500
Costs:
electricity phone rent office supplies other selling costs depreciation	10,500 2,400 4,200 2,900
Total:	22,000
Profit before tax:	30,500

Most of my income (1) from sales which (2) £50,000. (3), I received consultancy fees of £2,500. This (4) a total turnover of £52,500. My expenses (5): electricity, phone, office rent and office supplies of £14,200. My advertising and selling costs were £7,100. I (6) £700 for depreciation. Thus, my (7) operating costs were £22,000. (8) from my turnover (9) an operating profit before tax of £30,500.

D. Definitions

1. Which word or phrase from the profit and loss account fits each of these definitions?

a) a standard measure of how profitable the company is

b) the total amount of profit which is given out to the shareholders in dividends

a) earnings per share, b) profit attributable to shareholders

2. Which word or phrase from the balance sheet fits each of these definitions?

a) money which the company has available to spend immediately

b) goods and supplies which the company has bought but not yet used

c) money which is set aside for possible future expenses

Over to you

1. Make comparisons between the British Airways figures for 1997 and 1998. Which amounts were higher, better, lower or poorer in 1998? Would the shareholders be satisfied with the 1998 figures, do you think? Why / Why not?

2. Find financial data from other companies, for example from your own company or from another company’s annual report. Describe the main points from the data either orally or in writing.

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