These are IOUs issued by the British government in order to meet the shortfall between its revenue (mainly tax) and its expenditure on public services and defence. They are generally sold at competitive auctions to institutional investors looking for a relatively safe home for funds however they can subsequently be bought by anyone including retail …

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This is the difference between a firm’s sales and cost of sales expressed as a percentage. So for example if a firm makes annual sales of £500m and incurs cost of sales (direct costs of making sales) of £400m, gross profit is £100m (£500m-£400m) and the gross margin is 20% ((£100m/500m) x 100%). The higher …



Gross domestic product (GDP) is a broad measure of the wealth being generated by an economy. It is the total value of goods and services produced by an economy as measured by the Office for National Statistics (ONS). When things are going well, GDP will tend to rise and the reverse is true. One problem …

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This is the extent to which a firm is debt, rather than equity, financed expressed as a percentage of its total funding. So for example if a firm has £100m of debt and £200m of equity, gearing is 33% (£100/£300m). Low gearing makes a firm relatively safe and low risk but also unlikely to sparkle …

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These are gifts made during a person’s lifetime that are free of any obligation on the recipient. The motive for making such a gift may be to avoid, or reduce, an inheritance tax liability (see potentially exempt transfer). READ MORE


When one business buys another it may pay more for it than the value of its tangible net assets. That’s because buyers are often prepared to pay a premium for intangible assets such as reputation, brand name and market share, none of which will be recorded in the books of the target firm because accounting …

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