Image : http://www.flickr.com
A company's balance sheet is a record of its assets and liabilities. In practice, if we know how valuable the property and see deducting the total value of liabilities, we arrive at equity of the Company. Assets or book value of the company is also known as equity.
Property, first see the goods. Current assets are cash and other assets can be converted into cash quickly. Normally included in the budgetSheet in order of liquidity in cash, the first element as the liquid. Secondly, we have long-term assets. These are activities that can not be converted into cash within a short time.
One thing that investors look for value is out of cash and as a company. After a lot of money is usually a sign of strength. The company will be able to open new business opportunities and be able to go on relatively uneven pavement in the economic cycleintact.
Next on the list is stocks or commodities in the warehouse of the company, which sells to customers. In economics, we say that doing business with an empty cart. Our car has to be preserved and that is our product range. However, we do not want to be on our cars and flooded. They were also the danger of unnecessary in many cases.
Requests online. When the company sold products to their customers, very often, customers are given payment terms.In companies with a strong retail-bias, this could be a very small amount, if any, why collect money for all sales. We want to keep an eye on, because if the majority of a company's working capital, we are on the financial health of customers and the question of how long does it usually take place before payments.
The deferred payment or next. I like this because it shows that customers are willing to pay in advancebefore receiving the goods. This shows that the company's products are in demand and probably can not be replicated or very difficult to replicate by competitors. The company has a competitive advantage.
Next, we move to long-term assets. Companies may own property, vehicles and production facilities. Vehicles and production equipment will be copied over time and the value we see in this line is the total value at the date of the balance sheet has been prepared underDepreciation.
Then we have good will. This is something that was discussed in the case of Healthway Medical. This number will be displayed when a company acquires another company at a price above its book value. The value of the value of book ends as a business or goodwill of the previous budget.
This will be followed by other intangibles, copyrights, patents, trademarks, cover and so on. Only the intangible assets of another company may be bought to be reflected in a companyBalance sheet.
Business and goodwill and other intangible assets are amortized over time, if they have a limited life span. If they are not depreciating in value over time, they should not be amortized.
long-term investments are on. This is made all the investments a company can have maturities of one year. We need to see this as a bit 'more, what kind of investments were meant to be here as and when it occurs. It will differ from case to case, butIn general, we see that these investments generate the highest returns for the company.
A key indicator we use in changing the fundamental assets (ROA) is. It is a measure of the efficiency in which a company uses its assets. If we divide net profit by total assets and we get a figure in percentage terms. The higher the better.
We are moving to the liabilities and assets as there is no electricity and no current forms. First of allcurrent liabilities, we have bills to pay, provided that the money owed to suppliers of goods and services.
Then we have short-term debt or debt that is owed. If a company has a lot of short-term debts, this could be dangerous in times when credit is suddenly hard to find.
To calculate the financial health of a company, analysts are concerned the current ratio by dividing the sum by the sum of short-term liabilities of the capital. So you can imagine that if youmore from the first and less of the latter is a good thing. A stronger relationship is the relationship quickly and measures the ability of a company to meet its short-term liabilities with its current assets minus inventories. Each ratio value of more than one is good.
Among the long-term liabilities of long-term debt we have and so on. I think the most important thing to say here that very strong and long established company to generate cash flows in good health, have usually very little debt.
I thinkwant is common sense that we are the least debt in a company's balance sheet, but the fault sometimes seen as a necessary evil. We need to assess the debt case.
I hope this brief introduction to what a balance sheet and how to use specific indicators to determine the health of a society is useful.