Want to know how to read a balance sheet? This eBook explains what a balance sheet is and the role it plays in providing a picture of the financial status of a. The balance sheet, together with the income statement and cash flow statement, make up the cornerstone of any organization's financial statements. The main concept of a balance sheet is that total assets must equal the liabilities plus the equity of the company at a specified time. Editorial Reviews. About the Author. Rick J. Makoujy, Jr., is the author of Accounting in an Hour, eBook features: Highlight, take notes, and search in the book; In this edition, page numbers are just like the physical edition; Length: pages; Word Wise.
|Language:||English, German, Dutch|
|ePub File Size:||16.38 MB|
|PDF File Size:||20.19 MB|
|Distribution:||Free* [*Registration needed]|
More than free eBooks to read or download in english for your computer, smartphone, ereader or tablet!, Reading a Balance Sheet, Team FME. As you can see by looking at the Balance Sheet from our free ebook Small Business Finance , there are three parts to a balance sheet. download Balance Sheet Structures - 1st Edition. Print Book eBook ISBN: . Why do companies have balance sheets structured as they are?.
Skip to content. About Elsevier. Search for books, journals or webpages All Pages Books Journals.
Find a copy online
View on ScienceDirect. Anthony N Birts. Hardcover ISBN: Woodhead Publishing. Published Date: Page Count: Sorry, this product is currently out of stock.
Flexible - Read on multiple operating systems and devices. Easily read eBooks on smart phones, computers, or any eBook readers, including site.
When you read an eBook on VitalSource Bookshelf, enjoy such features as: Access online or offline, on mobile or desktop devices Bookmarks, highlights and notes sync across all your devices Smart study tools such as note sharing and subscription, review mode, and Microsoft OneNote integration Search and navigate content across your entire Bookshelf library Interactive notebook and read-aloud functionality Look up additional information online by highlighting a word or phrase.
Institutional Subscription. Free Shipping Free global shipping No minimum order.
Treasurers, bankers, directors, and students of business and economics. English Copyright: Powered by. You are connected as.
Connect with: Use your name: It is very easy to calculate. It is simply current assets divided by current liabilities. The accounting textbooks will tell you that a current ratio 2. This is one of the key measures of liquidity. This excludes some of the current assets that cannot easily be turned into cash, such as inventory. So in this example, the assets that would qualify as liquid current assets include cash, marketable securities, and accounts receivable, and we then divide that by current liabilities and we get a ratio of 1.
Reading a Balance Sheet
The accounting textbooks basically say a ratio of 1. The most common ratios to look at here are a couple different debt-to-equity ratios. The first one is long term debt divided by equity, and the other ratio is total debt divided by equity. When we talk about debt here, we are talking about interest bearing debt—that means loans and bank revolving lines of credit.
And equity, as you recall, is the amount of money that shareholders have invested in the company plus net income that has been earned and retained over the years.
When evaluating company strength using debt to equity ratios, the smaller the ratio, the better, as a company is financially stronger the less debt it has compared to equity. Essentially this is operating profit divided by interest expense.
Clearly we want the ratio to be above 1 to indicate that operating profit is more than interest expense, and usually something at 5 to 7 is considered very healthy. For this company they have very little interest expense and quite a bit of operating profit, so their interest coverage ratio is extremely healthy.
We simply take the net income and divide it by shareholders equity. As with other ratios, it would be good to compare this return on equity to other companies in the same line of business to get a better idea of how well this management team is generating a profit compared to its peers.
We discuss how to get information on other companies in the same industry in the Financial Statement Analysis series.
This is a measure of profit on all capital invested in the business which was used to acquire assets. To calculate this, we simply take net income and divide it by total assets.
The return on equity ratio is impacted by the debt to equity ratio of the specific company.
Balance Sheet MADE Easy
The return on assets ratio eliminates the impact of the source of financing, regardless if it is debt or equity, to measure management efficiency, and that is why it is good to look at both ratios when comparing companies. The first is inventory turnover.And equity, as you recall, is the amount of money that shareholders have invested in the company plus net income that has been earned and retained over the years.
Does a multinational differ greatly from a domestic company?
Sarah Holland. This excludes some of the current assets that cannot easily be turned into cash, such as inventory. This eBook you will give you a thorough understanding of the balance sheet, a powerful decision-making tool that every manager should be familiar with.
Because of that, the balance sheet can be almost useless when the numbers don't represent anything inside a person's head. This is a measure of profit on all capital invested in the business which was used to acquire assets.
One way to calculate this is to simply take costs of goods sold and divide that by ending inventory. Free Shipping No minimum order.