Balance sheet
- Created by: Shreeya Bhan
- Created on: 06-04-13 11:11
View mindmap
- The balance sheet: shows firm's accounting value at a given point in time; Assets = equity + liabilities
- Assets: current and fixed; listed in order of the length of time it takes for them to convert to cash; the structure of assets reflects the line of business the firm is in
- FIxed: tangible and intangible
- Liabilites: current or long term; listed in order of which they must be paid ; reflects capital structure decisions
- Owner's equity: diff b/w assets & liabilities - residual value
- NWC=CA - CL
- Liquidity issue: ease of conversion vs loss of value; the more liquid a business is, the less likely it is to face financial distress
- debt vs equity: higher use of debt is called financial leverage
- Mkt vs book value: book value is historical cost not current worth - diff can be quite large
- Assets: current and fixed; listed in order of the length of time it takes for them to convert to cash; the structure of assets reflects the line of business the firm is in
- Owner's equity: diff b/w assets & liabilities - residual value
Comments
No comments have yet been made