{"id":7503,"date":"2019-11-08T10:56:38","date_gmt":"2019-11-08T10:56:38","guid":{"rendered":"https:\/\/www.emagister.co.uk\/blog\/?p=7503"},"modified":"2019-11-08T10:56:51","modified_gmt":"2019-11-08T10:56:51","slug":"an-introduction-to-the-balance-sheet","status":"publish","type":"post","link":"https:\/\/www.emagister.co.uk\/blog\/an-introduction-to-the-balance-sheet\/","title":{"rendered":"An introduction to the Balance Sheet"},"content":{"rendered":"<h2><strong>What is it?<\/strong><\/h2>\n<p>A <strong>Balance Sheet<\/strong> is a financial statement that shows the economic and financial situation of a company in a specific moment.<\/p>\n<p>It is structured throughout three patrimonial concepts: assets, liabilities and shareholders\u2019 equity. \u00a0Assets is what a company owns, available to meet debts, commitments or legacies.<\/p>\n<p>Liabilities are what the company is responsible of, especially an amount of money owed.<\/p>\n<p>And Shareholders\u2019\u00a0Equity is also known as Share Capital is equal to a company\u2019s total assets minus its total liabilities. \u00a0It represents the book value of a company.<\/p>\n<p>The <strong>balance sheet<\/strong> is a snapshot at a moment in time. By itself, it can\u2019t give a sense of the tendencies that play in the long term; this is why balance sheets are compared year by year in a corporation.<\/p>\n<p>&nbsp;<\/p>\n<h2><strong>What can you analyze with the Balance Sheet?<\/strong><\/h2>\n<ul>\n<li>You will be able to tell how much money does the company has, how much it owes and what is left when you net these two.<\/li>\n<li>The income statement: you can see the firm\u2019s profitability: how much money it made or lost.<\/li>\n<li>How quickly customers are paying their bills.<\/li>\n<li>Where profits are being reinvested or spent<\/li>\n<li>What\u2019s happening with the short-term cash: is it declining or increasing?<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>\u00a0Importance of a balance Sheet:<\/strong><\/h2>\n<p>You can look at the <strong>balance sheet<\/strong> on its own or you can compare it with other statements like, for example, cash flow. This will let you know the company\u2019s health. There are 4 important takeaways:<\/p>\n<ol>\n<li>Liquidity: compare a company\u2019s current assets to its liabilities to have a glimpse of liquidity. Make sure the current assets are greater than the liabilities, this way; the company will be able to cover its short-term obligations.<\/li>\n<li>Leverage: how the company is financed tells a lot about the how much financial risk is taking.<\/li>\n<li>Rates of return: how well a company generates returns? You can see this in ratios as: ROE (return on equity) and ROA (return on assets).<\/li>\n<\/ol>\n<p>If you\u2019re interested in knowing more about accounting, don\u2019t hesitate to enrol into a career. This way you\u2019ll understand management concepts that will allow you to gain better understanding of how business work.<\/p>\n<p>&nbsp;<\/p>\n<p>Take a look at our site and find the ideal course you\u2019ve been looking for!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>What is it? A Balance Sheet is a financial statement that shows the economic and financial situation of a company in a specific moment. It is structured throughout three patrimonial concepts: assets, liabilities and shareholders\u2019 equity. \u00a0Assets is what a company owns, available to meet debts, commitments or legacies. Liabilities are what the company is [&hellip;]<\/p>\n","protected":false},"author":46,"featured_media":7504,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[204],"tags":[],"class_list":["post-7503","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-careers-guide"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.0 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>An introduction to the Balance Sheet - Emagister Guide<\/title>\n<meta name=\"description\" content=\"A balance sheet is a financial statement that shows the economic and financial situation of a company in a specific moment.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.emagister.co.uk\/blog\/an-introduction-to-the-balance-sheet\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"An introduction to the Balance Sheet - 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