Reading a Balance Sheet

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. It explains how assets, liabilities and equity are defined and documented and how its fits in with other key financial documents.

It describes how it can be used to determine an organization's liquidity and solvency, as well as, explaining how to perform a vertical and horizontal common size analyses to detect changes in an organization's financial status.

Preface

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.

You will learn:

• Exactly how assets, liabilities, and equity are defined and documented
• How to use a balance sheet to determine an organization’s liquidity and solvency
• How the balance sheet and other key financial documents fit together
• How to perform vertical and horizontal common-size analyses to detect changes in an organization’s financial status
• How to assess the ability of an organization’s management by using key financial ratios

Content

1. Assets, Liabilities, and Equity
   1. Simple Balance Sheet Example
   2. A More Complex Balance Sheet
2. Understanding Assets
   1. Current Assets
   2. Inventory/Stock
   3. Prepaid Expenses
   4. Property and Equipment
   5. Accumulated Depreciation
   6. Other Assets
3. Understanding Liabilities
   1. Current Liabilities
   2. Long-term Liabilities
4. Understanding Equity
5. What a Balance Sheet Tells You
   1. Liquidity and Solvency
   2. Tangible Versus Intangible Assets
   3. Performing a Common-Size Analysis
   4. Other Key Ratios
6. Summary
7. References