Quick Take:

Learn: Balance

Practice: Balance

Balance Sheet

Sheet Analysis

Sheet Analysis

Analysis

STEP: $1$ of $3$

The balance sheet of a company shows a firm's assets and liabilities $($and stockholders' equity$).$ In other wor sheet illustrates a firm's overall financial position. A typical balance sheet shows assets owned by the compa liabilities and equity on the right.

The assets are usually organized into two major types: currents assets and fixed $($or long$-$term$)$ assets. Curr accounts receivable, and inventory. These are assets that are expected to be converted to cash in short orde and equipment, along with other long$-$term assets.

Similarly, the right side of the balance sheet is usually organized into two major categories: liabilities $($mone$\text{'}$ equity. Current liabilities are claims that are due within one year. These types of liabilities typically consist of notes payable to banks. Long$-$term debt can include bonds with maturity dates far into the future. Stockhold sum of paid$-$in capital and retained earnings, or the difference between total assets and total liabilities.

The various financial ratios commonly used to analyze the financial strength of a company can also be used balance sheet together. For example, the current ratio is calculated by dividing current assets by current liab current ratio and the value of current liabilities, you could solve for the value of current assets by multiplying liabilities.

Additionally financial ratios can also be used to related items from the balance sheet to items in the income sold. For example, the total assets turnover ratio can be calculated as sales $($from the income statement$)$ div sheet$).$ In theory, if you know the total assets turnover ratio as well as the value of total assets, you can solv turnover ratio by total assets.

True or False: Assets generally appear on the right side of the balance sheet.

True

False

Cash would generally appear under

$"$ on the balance sheet.

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