The Bilanz Hattingen is one of the core financial statements used to evaluate a company. It reports a company’s assets, liabilities and shareholder equity at a given point in time.
A company’s assets are everything it owns that has value, from cash and investments to property and equipment. Liabilities are everything the company owes, from loans to wages and taxes. Combined, these items equal a company’s net worth.
Accountants and corporate finance teams are responsible for preparing the balance sheet. They use it to report a company’s financial health, comparing current assets against current liabilities and calculating key performance metrics like the current ratio. Investors also rely on the balance sheet when evaluating investment opportunities.
When reviewing a company’s balance sheet, pay attention to its footnotes, as these can give clues about the accounting methods and assumptions the company uses to prepare it. For example, depreciation and inventories are accounted for differently across different accounting systems, which can affect the figures posted to the balance sheet. This can make it challenging to compare the performance of two companies with different methodologies.
A company’s balance sheet is also subject to professional judgement that can impact its accuracy. For example, a company’s accounts receivable must be continually assessed for impairment. If it is unlikely that the company will be able to collect its outstanding invoices, these amounts must be recorded as liabilities on the balance sheet. Similarly, the value of fixed assets (like property) must be continuously assessed and reported at their carrying amount, which is generally their amortised cost less accumulated depreciation.
While a company’s balance sheet is an excellent snapshot of its current financial state, it doesn’t provide insight into how well the business is operating in the future. This is where other financial statements, including the income statement and cash flow statement, come into play.
Working capital is the net value of a company’s current assets minus its current liabilities. It is a useful measure of a company’s ability to cover its short-term expenses and meet its long-term obligations, including debt repayments.
A company’s overall assets are segregated into current and non-current sections, with the latter being broken down further into specific accounts. For example, Apple’s total assets of $323.8 billion are grouped towards the top of its balance sheet, with current assets being further broken down into their respective accounts such as cash and investments. In contrast, its total liabilities are reported on the lower half of its balance sheet with both current and non-current liabilities reporting their respective balances by account. Combined with its total shareholder equity, this information equates to the company’s overall net worth.