2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16
Under the intricate term "balance sheet of an enterprise" is hidden form number 1, or just one of the reports on the financial condition of this very enterprise. In other words, the balance sheet contains the property of the organization and its sources of funds, expressed in monetary terms. These two components are also called assets and liabilities. With proper financial management, they should be equal in total.
Why is the balance sheet of the enterprise? To ensure that each user receives timely, complete and objective information valid at this time.
Let's talk about assets and liabilities. They, in turn, are also divided, each into several subsections. Assets are made up of fixed and current assets (or non-current and current assets). The difference between them is this: the former take part in production for one year or more, that is, a fairly long period of time. And their cost, as they wear out, affects the cost of finished products. By the way, this process is called depreciation. Revolving funds are those means of labor that are fully spent induring one production cycle, and depreciation occurs immediately.
The company's balance sheet includes its fixed capital, real estate, and long-term investments as non-current assets. Current assets include short-term investments, financial reserves and VAT on acquired assets.
Now consider the classification of liabilities. They consist of the capital of the enterprise, its reserves, as well as debts - both short-term and long-term. We will dwell on each of these points separately.
No big deal with equity. This is the money invested by the owners and received by them in the form of profit. The balance sheet of an LLC enterprise includes both authorized and additional finance, as well as reserve capital, in equity. Another balance sheet item is retained earnings.
Short-term debt are those obligations that the company is obliged to repay in a relatively short time - no more than a year. This section of the balance sheet includes credits, loans, obligations to suppliers. In turn, long-term debt is more loyal - the maturity of obligations is much longer. In addition to loans and borrowings, it also includes deferred tax liabilities.
You can analyze the balance sheet of an enterprise in several ways - horizontal, vertical and mixed.
Horizontal analysis: the basic unit is a specific period of time. Regarding himrelative and absolute values of changes in balance sheet sections are calculated.
Vertical analysis: the structure of balance sheet items is analyzed, taking into account a certain date. As a result, you can summarize several sections or calculate the financial stability ratio of the enterprise.
The balance sheet of an enterprise is an integral and effective element of the activity of any company.
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