CAknowledge.com bell-icon
  • Home
  • Celebrity
  • Athletes
  • Business
  • Politicians
  • Articles
  • Stocks
  • News
CS
CMA
CA Final
IPCC
Income Tax
Sales Tax
CS Professional
CS Executive
CS Foundation
CMA Final
CMA Inter
CMA Foundation
CPT
Jobs
Tally
Stock market
Investment
Banking
SEBI
FRM
Accounting
Interview
GST
Insurance
EPF & UAN
Economy
Company Law
Judiciary
Indirect Tax
Money
Word Excel Formats
News
Finance
Training
NPO
Auto
HR Formats
Key Difference
Net Wealth
6hip
Featured
Taxation
Exam Form
CA Foundation
Audit
Question Papers
UGC NET
Syllabus
CBSE
Career
IAS Interview
Firms
CA Firms
CFA
Hindi
Central Government Scheme
Rajasthan Govt Scheme
Press Release
CS Firms
CMA Firms
Technology
FAQ
GST Registration
GST Rates
CGST
GST Return
GST Sections
Notifications
GST in Hindi
SGST
E-Way Bill
Goods and Service Tax
IGST
UTGST
Medical
CSEET
Result
Cryptocurrency
Health
Diabetes
  1. Home >
  2. Articles >
  3. Accounting
  4.   >
  5. How To Finalize Balance Sheet Analysis Of Balance Sheet

How to Finalize Balance Sheet & Analysis of Balance Sheet

How to Finalize Balance Sheet & Analysis of Balance Sheet. A balance sheet is a summary of a business's finical health on any given day.

CA Ridhi Dhoot

Last Updated : September 18, 2023

whatsapp-color google-news
How to Finalize Balance Sheet & Analysis of Balance Sheet
Content in this Article

How to Finalize Balance Sheet & Analysis of Balance Sheet. A balance sheet is a summary of a business's finical health on any given day. It shows a company's assets, liabilities, and equity accounts. In this article, you can find some basic details for How to Finalize the Balance Sheet and Analysis of the Balance Sheet.

If you like this article then please like us on Facebook so that you can get our updates in the future ……….and subscribe to our mailing list ” freely “

How to Finalize Balance Sheet & Analysis of Balance Sheet

Steps for making & Finalizing a Balance Sheet:

  • Determine the date of the balance sheet: The balance sheet is created to show the assets, liabilities, and equity of a company on a specific day of the year. Hence, it is necessary to decide that date.
  • Divide into two heads: Assets & Liabilities.
  • Calculating Your Assets: Assets are anything of value which is owned by the company.
  • Classify them into Current & Non Current Assets.
  • Current assets include cash, stocks and bonds, accounts receivable, inventory, prepaid expenses and anything else that can be converted into cash within one year or during the normal course of business
  • Fixed Assets are also known as Long-term assets. Fixed assets are the assets that produce revenues. They are distinguished from current assets by their longevity. They are not for resale.
  • Compute the Total Assets.
  • Calculating Your Liabilities: There are two types of liabilities: current liabilities and long-term liabilities.
  • Current liabilities are accounts payable, accrued expenses (such as wages and
    salaries), taxes payable, etc. which are required to be ordinarily paid in the near future.
  • Long-term liabilities may include financing from relatives, banks, finance companies or others.
  • Compute Total Liabilities.
  • The formula that defines the balance sheet: Assets = Liabilities + Net Worth.
  • Net worth is what is left over after liabilities have been subtracted from the assets of the business. It indicates the capital existing on a particular date.
  • After completing the above steps, the total of both the sides, that is, the debit & credit sides should be calculated and it must be the same.

Analyzing a Balance Sheet through various ratios:

  • We can calculate some financial ratios that will help us to easily analyze the balance sheet.
  • Let us have a look on few such ratios/calculations:

i) Quick Ratio:

Quick Ratio = (Current Assets – Inventories)/ Current Liabilities

The Quick Ratio indicates a company’s ability to meet its short–term obligations with its liquid assets. The higher the quick ratio, the better will be the liquidity of the company.

ii) Current Ratio:

Current Ratio = Current Assets/ Current Liabilities

It is used to determine the company’s position with regards to its ability to repay its short term liabilities.

iii) Debt / Equity Ratios:

  • Short Term Debt to Equity Ratio = Short Term Debt/ Shareholders Equity
  • Long Term Debt to Equity Ratio = Long Term Debt/ Shareholders Equity
  • Debt to Equity Ratio = Total Liabilities/ Shareholders Equity

Advertisement

These ratios basically determine how the company can finance its growth.

iv) Turnover Ratios:

Debtors Turnover Ratio = Turnover / Average Debtors

Inventory Turnover Ratio = Cost of Goods Sold/ Average Inventory

Inventory to Sales Ratio = Inventory/ Revenue

v) Capital Structure Ratios:

  • Total Liabilities to Total Assets = Total Liabilities/ Total Assets
  • Short Term Debt to Total Debt = Short Term Debt/ Total Debt
  • Long Term Debt to Total Debt = Long Term Debt/ Total Debt

Recommended Articles

  • How to Read or Analyse a Balance Sheet
  • Capital and Revenue Expenditure Full Details
  • List of Tally Ledgers under Group List
  • How to Prepare Final Accounts?
  • Checklist for Statutory Audit of Banks

Share with friends

Share on Facebook Twitter WhatsApp
Latest Articles

CA Final Result Nov 2023 (Expected Date) Pass Percentage Toppers

Nella Rose Net Worth 2023: Real Name Parents height and Age

Matthew Wolfenden Net Worth 2023: Wife Deaf Family & Height

Corey Perry Net Worth 2023: Salary Contract Wife and Age

Luis Severino Net Worth 2023: Contract Salary Injury & Wife

Curt Cignetti Net Worth 2023: Salary Contract Family and Age

Joni Ernst Net Worth 2023: News Husband Height & Committees

Sutton Stracke Net Worth 2023: Husband Age Kids & Salary

caknowledge.com
Follow us on
facebook twitter instagram linkedin
Have a query?
Support
Useful Links
SiteMap
Privacy Policy
About CAKnowledge
Contact Us
Advertise With Us
POST TYPES
Celebrity
Net Wealth
Hollywood
YouTuber
Singer
Actors
Bollywood
Directors
Journalist
Comedian
Authors
Celebrity Chefs
Models
Richest DJs
Rappers
Lawyers
Music Artist
Women
History
TV Personality
Sheikh
Actress
Athletes
Sports
Cricketer
Tennis Players
Hockey
Football Player
Olympians
Wrestlers
Baseball Players
Kabaddi
Race Car Drivers
Golfers
Badminton
Boxers
NBA Players
NFL Players
Racing Drivers
Business
Corporate
CEOs
Designers
Startup
Entreprenuer
Politicians
Congress
Presidents
BJP
Royals
Republicans
Democrats
Politics
Stocks
Companies
TV Personality
  • Tucker Carlson Net Worth
  • Emily Compagno Net Worth
  • Chuck Todd Net Worth
  • Kris Jenner Net Worth
  • Anderson Cooper Net Worth
Politician
  • Nancy Pelosi Net Worth
  • Hunter Biden Net Worth
  • Justin Trudeau Net Worth
  • AOC Net Worth
  • Joe Biden Net Worth
  • Ron DeSantis Net Worth
  • Zelensky Net Worth
  • Vladimir Putin Net Worth
  • Donald Trump Net Worth
  • Jen Psaki Net Worth
  • Kevin McCarthy Net Worth
  • Elizabeth Warren Net Worth
History
  • Hitler Net Worth
  • JFK Net Worth
  • Napoleon Net Worth
  • Pablo Escobar Net Worth
  • Genghis Khan Net Worth
  • Mansa Musa Net Worth
  • Rothschild Family Net Worth
  • Alexander the Great Net Worth
YouTuber
  • Blippi Net Worth
  • Jake Paul Net Worth
  • Logan Paul Net Worth
  • MrBeast Net Worth
  • PewDiePie Net Worth
  • Adin Ross Net Worth
  • KSI Net Worth
  • Kai Cenat Net Worth
Rappers
  • Jay-Z Net Worth
  • Sean Combs Net Worth
  • Dr. Dre Net Worth
  • Kanye West Net Worth
  • Eminem Net Worth
  • Drake Net Worth
  • Master P Net Worth
  • Ice Cube Net Worth
  • Snoop Dogg Net Worth
  • Nicki Minaj Net Worth
  • Travis Scott Net Worth
  • Cardi B Net Worth
  • 50 Cent Net Worth
Boxers
  • Floyd Mayweather Net Worth
  • Andrew Tate Net Worth
  • Bruce Lee Net Worth
  • Tristan Tate Net Worth
  • Mike Tyson Net Worth
  • George Foreman Net Worth
  • Tyson Fury Net Worth
  • Miesha Tate Net Worth
Actress
  • Kim Kardashian Net Worth
  • Amber Heard Net Worth
  • Jami Gertz Net Worth
  • Reese Witherspoon Net Worth
  • Jessica Alba Net Worth
  • Jennifer Aniston Net Worth
  • Scarlett Johansson Net Worth
  • Jennifer Lawrence Net Worth
  • Angelina Jolie Net Worth
Athletes
  • Cristiano Ronaldo Net Worth
  • LeBron James Net Worth
  • Lionel Messi Net Worth
  • Conor McGregor Net Worth
Singer
  • Rihanna Net Worth
  • Madonna Net Worth
  • Celine Dion Net Worth
  • Taylor Swift Net Worth
  • Beyonce Net Worth
  • Shakira Net Worth
  • Jennifer Lopez Net Worth
  • Justin Bieber Net Worth
  • R. Kelly Net Worth
Cricketer
  • Virat Kohli Net Worth
  • MS Dhoni Net Worth
  • Sachin Tendulkar Net Worth
Business Men
  • Elon Musk Net Worth
  • Gautam Adani Net Worth
  • Jeff Bezos Net Worth
  • Warren Buffett Net Worth
  • Mukesh Ambani Net Worth
  • Mark Zuckerberg Net Worth
  • Rob Walton Net Worth
  • Jack Ma Net Worth
Actor
  • The Rock Dwayne Johnson Net Worth
  • Jason Statham Net Worth
  • Tyler Perry Net Worth
  • Tom Cruise Net Worth
  • Eddie Murphy Net Worth
  • George Clooney Net Worth
  • Adam Sandler Net Worth
  • Brad Pitt Net Worth
  • Will Smith Net Worth
  • Vin Diesel Net Worth
  • Keanu Reeves Net Worth
  • Robert Downey Jr. Net Worth
  • Ryan Reynolds Net Worth
  • Leonardo DiCaprio Net Worth
  • Arnold Schwarzenegger Net Worth
families
  • Rothschild Family Net Worth
  • Walton family Net Worth
  • The Bush Family Net Worth
  • Rockefeller Net Worth
NBA Players
  • Michael Jordan Net Worth
  • LeBron James Net Worth
  • Kobe Bryant Net Worth
  • Magic Johnson Net Worth
  • Chris Paul Net Worth
  • Stephen Curry Net Worth
NFL Players
  • Fran Tarkenton Net Worth
  • Tom Brady Net Worth
  • Aaron Rodgers Net Worth
  • Jim Brown Net Worth

© 2023 Caknowledge.com • ❤️ From Your Heart

The materials and information provided on this website are for reference purposes only.