In conclusion, a company’s financial statements regarding its financial position are critical to all concerned. First and foremost, these financial statements provide critical tools for companies to make decisions to improve its share value in the global market of fierce competition. Secondly, they provide accountability to shareholders and stakeholders in the company providing better stability in its business practices and requirements regarding the Securities Exchange Commission (SEC) and General Accepted Accounting Principles (GAAP). Lastly, financial statements paint a picture that gives a measurable to the success of a dream once birthed long ago by an entrepreneur to get an idea to the marketplace with great expectations of striking it rich.
The balance sheet provides a snapshot of a firm’s financial position at a specific point in time, by using the company’s Asset and Debit Equity.
A strong balance sheet gives an investor an idea of how financially stable the company really is. Many professionals consider the top line, or cash, the most important item on a company’s balance sheet. The big three categories on any balance sheet are “assets, liabilities, and shareholder equity.” Evaluating Barnes & Noble’s assets for the time 2014 at $3,537,449, 2013 at $3,732,536 and 2012 at $3,774,699, the company’s performance summarizes that it is remaining stable. These numbers reflect a steady rate over the three year period. Like assets, liabilities are current or noncurrent. Current liabilities are obligations due within a year. Key investors look for companies with fewer liabilities than assets. Analyzing this type of important information, informs a potential investor that if the company owes more money than they are bringing in that this company is in financial trouble. Assessing the liabilities of the balance sheet, for the same time period, it is also consistent with the assets. The cash flow demonstrates a stable performance in the company’s assets and would be determined that the liabilities of this company are also stable. Equity is equal to assets minus liabilities, and it represents how much the company’s shareholders actually have a claim to. Investors customarily observe closely
Now, having reviewed almost all the issues related with the balance sheet, we can say in my opinion that sine its appearance a few centuries ago it has been an important and outstanding financial statement summarizing the financial position of an enterprise at a particular point in time. In the quickly developing technological environemt it might change its form, it might even change some of its principles, it will be viewed along with more and more information in the era of information, but it will keep for some more time its "position of such a great importance".
All financial information and notes are used to asses a company’s health and predict what the coming year may hold. The information found on the financials contains a large amount of information and once one understands how to interpret it then one has a visual of the company’s health.
Balance statement shows investors all the company’s assets, liabilities and shareholders’ equity. Which include assets, liabilities, and stockholders equity. Beginning of the balance sheet it includes the current assets: cash, short term investments, inventories, deferred income taxes, prepaid expenses. Assets include: property and equipment, long term investments, goodwill, intangible assets. Cash is a liquid assets, inventory is all the goods that are available to be sold and prepaid expenses which is all the expensive that is all paid beforehand. Intangible assets are what we cannot touch, goodwill is one of the intangible asset. In current liabilities include accounts payable, accrued liabilities, current debt, liabilities include long-term debt. Accounts payable is money owed by a company to its creditors. Shareholders’ equity is the money that attributable to a business’s owner, under this follows preferred stock, common stock, paid in
I agree with Kevin’s statement that financial statements provide only a partial look at the picture when valuing a company. While providing the financial data such as sales, expenses, gross profit, total assets and liabilities, and net worth it leaves out the internal influences that most influence the bottom line.
The balance sheet, as provided by McLaughlin (McLaughlin, 2009, p. 125), gives a number of assets that have the potential to be liquefied in an effort to maintain organizational stability. Assets provided by the fictitious organization include cash, savings, pledges, investments, and land and equipment. Cash is usually considered to be the most liquid when meeting debt obligations,
The balance sheet however is critical in reporting the assets, liabilities and owner’s equity up until a specified date. When preparing this financial statement a company simply takes all of their assets (cash, accounts payable, supplies, equipment etc.) and adds them together to get a total dollar amount for all assets. A company also takes all liabilities and owner's equity and adds them together as well. This enables the company to get a total dollar amount for all liabilities and owner’s equity just as it can with assets.
A balance sheet is an educational, financial tool that summarizes a company’s assets, liabilities, and net worth during a particular time frame. The data provided by the balance sheet informs the organizational leaders of the financial status of the firm. Moreover, the balance sheet displays what the company owns and owes (Edmonds, Tsay, & Olds, 2011). Completing as well as understanding the numbers is equally as critical as the meaning behind the figures.
Managers in sustaining organization’s today know that in order for decision’s to be successful they need to be made with the total financial picture in mind. Organization’s who hope to still be doing business in the following years look at all of the implications of investments and taking on additional debt by first reviewing its effects on their bottom line. They do this through the three most important applicable financial statements, the Income Statement, Cash Flow Statement and also the Balance sheet. We will discuss these statements in depth below.
Balance sheet-: Balance sheet is a statement at the book value of all of the assets and liabilities of a business or other organization present a particular date such as the end of the financial year. It is known as a balance sheet because it reflection accounting identity the components of the balance sheets. The balance sheet must follow the following formula: