A company’s Bilanz Hattingen is one of the most important documents for a business leader or potential investor to understand. Many companies complete balance sheets on a monthly or yearly basis in order to track the company’s growing finances.
A balance sheet reports a snapshot of a company’s assets, liabilities, and equity at a specific point in time. The most commonly used categories of value are cash, stocks, investments, and debts.
The assets section of a balance sheet shows the company’s resources that can result in future economic value. This information can help an analyst assess the company’s near-term financial needs, meet debt obligations and make distributions to shareholders. Most balance sheets adhere to an equation that equates total assets with liabilities and shareholder equity.
The first account listed in the assets portion of a balance sheet is current assets, which includes cash, marketable securities and accounts receivable (debts owed by customers for goods and services that have been delivered but not yet paid for). Other types of assets are long-term assets like machinery, building or vehicles. Long-term assets may lose some of their value over time due to wear and tear, so they are depreciated on the company’s income statement.
Other valuable resources include intangible assets, such as a company’s reputation and brand, which are not tangible but can add value to the business. Intangible assets are generally difficult or impossible to sell for cash and may be protected by patents, copyrights or trademarks.
Liabilities are financial responsibilities that have to be settled over time. They include short-term obligations such as accounts payable and wages payable, and long-term debt like mortgages and loans. These are listed on the right side of a balance sheet.
Most people have liabilities in their daily lives such as car payments, rent and credit card bills. In business, liabilities are money a company owes to outside parties such as suppliers, banks and customers. These are recorded in a company’s accounting books as outstanding bill payments, payables and taxes. In some cases, companies may also record other types of liabilities, such as contingent liabilities in case of a lawsuit or warranty claims.
A company’s total liabilities are equal to its net assets plus its retained earnings minus any dividend payments and share repurchases. The difference between a company’s assets and liabilities is called shareholder equity, or equity capital. This is a key indicator of a company’s health.
Often seen as the most important component of a company’s balance sheet, shareholders’ equity is the difference between the total assets and the total liabilities. It consists of the following components: common stocks, preferred shares, additional paid-in capital, retained earnings, and treasury shares. Common stocks are the partial ownership stakes companies sell to investors, whereas preferred stock has features of both common equity and debt. Additional paid-in capital is money a company receives above its par value, and retained earnings are the accumulated profits of the company minus dividends.
The sum of these is then subtracted from the total assets to reveal the actual owners’ equity of a company. If this number is positive, it means that the company’s assets are worth more than its liabilities, but if it is negative for long periods, it can lead to insolvency. If a company is public, this figure can be found in the shareholders’ equity section of its balance sheet.
A company’s cash flow reflects how much money is coming in and going out. This includes items like the amount of money received from customers as sales revenue and the payments made to vendor partners for operational costs.
Other items include cash from investing and cash from financing. Cash from investing reports how much money is being generated or spent by investment activities like buying and selling securities. Cash from financing shows how much cash is being raised through activities like issuing or retiring debt, and from the repurchase or sale of shares.
A business’s working capital is the amount of cash that is left over after subtracting its liabilities and expenses from total assets. This is an important metric because it allows you to see whether your company has enough cash to pay off its loans and continue operating. The more cash a business has, the longer its runway and the higher its valuation.