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The balance sheet is the financial statement that reports the assets, liabilities and net worth of a company at a specific point in time. Assets represent the total resources of a company, which may shrink or increase depending on the results of operations.
Assets are listed in liquidity order - ease of converting into cash. Liabilities include what a company owes: All businesses divide assets and liabilities into two groups: Net worth is the owner's investment in the case of a proprietorship or partnership or capital stock original investment plus earned surplus earnings retained in the business in the case of a corporation.
Current Assets Current Assets sometimes referred to as trading assets include cash, trade receivable and inventory.
These are items that can be converted to cash in less than one year or in the normal operating cycle of a business. Also included in this category are any assets held that can be readily turned into cash with little effort, such as government and marketable securities.
Cash refers to cash on hand on in banks, checking account balances, and other instruments such as checks or money orders that have not yet been deposited.
A rule of thumb is that cash positions are generally strongest after the peak selling season. When cash balances are continually small, it may be that a business is experiencing slow receivable collection or some other financial weakness. Current Assets - Marketable Securities Marketable securities are found on many balance sheets.
Marketable securities can include: Marketable securities are usually listed at cost or market price, whichever is lower. Accountants will frequently list securities at cost with a footnote indicating market price on the balance sheet date.
When marketable securities appear on a statement, it frequently indicates investment of excess cash. Current Assets - Accounts Receivable Sales between most businesses are made on a credit basis.
Accounts receivable indicate sales made and billed to customers on credit terms. A retailer, such as a department store, may show its customer charge accounts billed and unpaid in this category.
In many businesses, accounts receivable are frequently the largest item on the balance sheet. You should pay special attention to this category as the company's financial health depends upon timely collection of receivables.
Every business that has accounts receivable will probably have some portion that it is unable to collect because customers fail to pay for one reason or another - mismanagement, disaster or intent. Usually a business will set aside an estimated allowance for these uncollectable or doubtful accounts.
This allowance called "bad debt" is deducted from the total receivables shown on the balance sheet. Frequently a footnote identifying the amount deducted will be found in the statements. Notes receivable represent a variety of obligations with terms coming due within a year.
Notes receivable may be used by a company to secure payments from past-due accounts, or for merchandise sold on installment terms. In any case, notes receivable should be reviewed.
You will find that inventory includes different items depending on whether a business is a manufacturer, wholesaler or retailer.
Retailers and wholesalers will show goods that are sold "as is" with no further processing or supplies required before shipping.Financial Statement Analysis Homework Help Questions.
What is the ideal Operating to Financial Leverage Ratio?
Financial leverage is the degree to which an organization is utilizing debt (borrowed. S&P Dow Jones Indices is the world's largest, global resource for index-based concepts, data and research. Home to iconic financial market indicators, such as the S&P and the Dow Jones Industrial Average, S&P Dow Jones Indices has over years of experience constructing innovative and transparent solutions that fulfill the needs of institutional and retail investors.
Financial Statement Analysis Financial Statement Analysis Celeste Thompson, Marcy Newbern, Cynthia Rios, Lashun Nicholson, Joseph Terramgra ACC/ August 30, Financial Statement Analysis The financial statement is a report that divulges a company’s past and present financial standings.
Financial ratio analysis A reading prepared by Pamela Peterson Drake O U T L I N E 1. Introduction 2.
FINANCIAL ANALYSIS PROJECT – FINAL PAPER 9 Ratio of fixed assets to long-term liabilities The fixed-assets- to long-term-liabilities ratio is a way of measuring the solvency of a company. A company's long-term debts are often secured with fixed assets, which is why creditors are interested in this ratio. In financial accounting, a cash flow statement, also known as statement of cash flows or funds flow statement, is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to . Financial Statement Analysis Financial Statement Analysis Celeste Thompson, Marcy Newbern, Cynthia Rios, Lashun Nicholson, Joseph Terramgra ACC/ August 30, Financial Statement Analysis The financial statement is a report that divulges a company’s past and present financial standings.
Liquidity ratios 3. Profitability ratios and activity ratios. Financial Statement Analysis FINANCIAL MANAGEMENT Financial Statement Analysis The process of determining financial strengths and weaknesses of a firm by establishing strategic relationship between the items of the balance sheet, profit and loss account and other operative data.
FINANCIAL ANALYSIS PROJECT – FINAL PAPER 9 Ratio of fixed assets to long-term liabilities The fixed-assets- to long-term-liabilities ratio is a way of measuring the solvency of a company.
A company's long-term debts are often secured with fixed assets, which is why creditors are interested in this ratio.