What's it: A balance sheet presents the company's current financial position. It consists of three subparts: assets, liabilities, and shareholder equity. Also called a statement of financial position or a statement of financial conditions.The
Financial Statement Analysis
Financial Statement: Importance, Components, Users
Analyzing financial statements is a way to understand how healthy a company is. Companies exist to make profits and money. And, to do this, they produce goods or provide services. Therefore, financial performance should be a reflection of the
Cost of goods sold (COGS): Why It Matters, How to Calculate It
Cost of goods sold (COGS) is all costs the company incurred in producing goods and providing services. It consists of labor costs, raw materials, overhead, finished goods inventory costs.COGS covers most of the company's expenses. The value is
Selling, general and administrative expenses (SG&A expenses)
Selling, general, and administrative expenses are operating expenses unrelated to the production of goods or services provided. Examples are executive salaries, salaries of non-production staff, insurance, advertising and promotions, and travel and
Net Revenue: Why It Matters, How To Calculate It
Net revenue is gross revenue after adjusted for deductions. When selling a product, your company records it as gross revenue. To get it, you need to reduce it by factors such as:Discounts, i.e., the value or percentage of the deduction on the
Gross Revenue: Why It Matters, How To Calculate It
Gross revenue is the sum of all sales of goods and services. That is the total invoice value for the goods and services you send to customers. You can calculate it by multiplying the units sold by the selling price per unit.If you reduce it with
Gross Profit: Formula, Importance, How To Calculate It, Its Limitations
Calculating the gross profit is the first step in the analysis of the company's profitability. That tells you how profitable the company's production is. But it's not a complete picture to assess the profitability of a company. Factors such as the
Accrued liabilities
Accrued liabilities, such as trade payables, work in reverse with trade receivables. They become a source of liquidity if the company can extend it. But, if many of them are due at the same time, it could drain the company's cash and could lead to
Current portion of long‐term debt
The current portion of long‐term debt represents cash outflows that companies must pay within one year from the balance sheet date. If having no enough money, the company has a high risk of default.Definition of the current portion of long‐term
Accounts Payable: Meaning, Importance, How to Analyze
Analysts are often keen to examine the accounts payable relative to the purchase. It gives them an insight into the company's relationship with its suppliers. Leeway to delay payments is a source of liquidity for the company.Accounts payable
Notes Payable: Definition, Its Reporting
On the balance sheet, you can find the notes payable account in the liabilities section. It may exist in the current liabilities section or, in the non-current liabilities, depending on their maturity.Notes payable definition Notes
Cash and Cash Equivalents: Meaning, Importance
Cash and cash equivalents are cash plus short-term investment instruments that you can immediately cash and have minimal risk of changes in value. You can find this account in the top row of assets on the balance sheet.What are the components of