Did you know that there’s a financial document that directly helps businesses become successful? 😮
Being able to balance many things results in success 🚀
So, welcome to the lesson on Balance Sheets! 🤗
💡 balance sheet = financial statement that shows a company's assets, liabilities, and equity. 💸
It helps companies keep track of their finances and make sure they're staying on top of their financial goals. 💰
Knowing how to read and use a balance sheet is an important part of keeping a business successful. 🤝
First, you have to understand the 3️⃣main components: assets, liabilities, and equity. 🤓
💡Assets = things a company owns that have value, like cash, inventory, and buildings. 💰
💡Liabilities = money owed to other people or companies. 💸
Some assets and liabilities are current, meaning they will be used or paid off within the next 12 months. 🤓
Other assets and liabilities are non-current, meaning they won't be used or paid off in that time frame. 🕰
💡Equity= the difference between the value of assets and liabilities and represents the value of your company. 🤑
Now let's get into the nitty-gritty of balance sheets. 🤓 A balance sheet equation is Assets = Liabilities + Equity. 🤔
This equation must be balanced, meaning that the left and right sides of the equation must be equal. 🔢
To make sure a balance sheet is balanced, an accountant adds up all the assets and subtracts liabilities and equity. 🧮
Using a balance sheet, you can understand the value left over after a company pays its debts 🥳
Now you know how to use them to evaluate the equity worth of your investments! 🤑
