BALANCE SHEET
Transcript: SHAREHOLDER'S EQUITY The money that a company owes to outside parties, from bills it has to pay to suppliers to interest on bonds it has issued to creditors to rent, utilities and salaries. Within the assets segment, accounts are listed from top to bottom in order of their liquidity, that is, the ease with which they can be converted into cash. current liabilities A balance sheet is a financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point in time. These three balance sheet segments give investors an idea as to what the company owns and owes, as well as the amount invested by shareholders • Long-term debt • Pension fund liability • Deferred tax liability Interpret a Balance Sheet Assets, liabilities and shareholders' equity are each comprised of several smaller accounts that break down the specifics of a company's finances. • Cash and cash equivalents • Marketable securities • Accounts receivable • Inventory • Prepaid expenses The balance sheets gets its name from the fact that the two sides of the equation above assets on the one side and liabilities plus shareholders' equity. current assets BALANCE SHEET Shareholders' equity meaning its shareholders. It is also known as "net assets," since it is equivalent to the total assets of a company minus its liabilities, that is, the debt it owes to non-shareholders. BREAKING DOWN LIABILITIES long term liabilities A number of ratios can be derived from the balance sheet, helping investors get a sense of how healthy a company is. These include the debt-to-equity ratio and the acid-test ratio, along with many others. The income statement and statement of cash flows also provide valuable context for assessing a company's finances, as do any notes or addenda in an earnings report that might refer back to the balance sheet. long term assets • Current portion of long-term debt • Bank indebtedness • Interest payable • Rent, tax, utilities • Wages payable • Customer prepayments • Dividends payable and others • Long-term investments • Fixed assets • Intangible assets The balance sheet adheres to the following formula: Assets = Liabilities + Shareholders' Equity ASSETS
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