Assets and liabilities - a tool for assessing the activities of an enterprise

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

The organization's balance sheet consists of its assets and liabilities. And these two indicators are closely related. The sum of all assets of the enterprise is always equal to the value of its liabilities and this equality constitutes the balance sheet. Those. when one of the indicators increases, the second increases by the same amount.

What are the assets and liabilities of an enterprise? Assets are the property and various resources of the organization, which can be expressed in monetary terms. They are used for profit. There are several types of them - current, long-term, intangible, as well as financial investments.

Current assets include money on the current account or in the company's cash desk. Long-term assets include production facilities and equipment. Intangible assets are the intellectual property of the enterprise, and financial investments are investments that cannot be used for the needs of the company in the near future, but in the future can bring him significant profit.

Liabilities are the company's available capital, as well as all the obligations of the company. They are made up of all production costs, borrowed funds and other debts of the institution. Liabilities include the authorized capital, accounts payable, as well as the profit of the organization.

In order to analyze assets and liabilities in an enterprise, a balance sheet is drawn up after a certain period of time. It allows, based on these indicators, to assess the current state of the company and, if necessary, take measures to improve its work.

Analysis makes it possible to manage the assets and liabilities of the enterprise to maintain its profitability and reduce possible risks. Such management helps to properly distribute funds within the company, attract loans, and also facilitates timely financial investments in fixed assets.

Analyzing assets and liabilities, you can identify the amount of current and permanent assets, the amount of own and borrowed funds, the company's dependence on borrowed resources, as well as the urgency of their repayment and other obligations of the organization. That is, they can be used to assess the state of the company at the time of the analysis.

When assessing the financial condition of a company, assets and liabilities are analyzed in absolute and relative terms. Also, temporary (comparison of reporting data with the previous period) and structural (identification of the impact of each indicator on the overall result) analyzes are carried out. According to the resultsthe work carried out, the further activities of the organization are planned.

Analysis of assets and liabilities of balance sheets plays a crucial role in assessing the financial performance of an enterprise. It allows you to find shortcomings and make adjustments to the work of the company in order to increase its profitability. He also helps to plan the economic activities of the organization, depending on certain economic factors.