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Balance Sheet Analysis Guide

The document provides a guide to understanding a balance sheet, which is a snapshot of a company's assets, liabilities, and shareholders' equity at a specific time. It explains how to read the balance sheet, detailing current and non-current assets, short and long-term liabilities, and the importance of shareholders' equity. Additionally, it highlights key ratios for financial analysis and encourages readers to seek assistance with accounting and reporting.

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tedy hermawan
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60 views7 pages

Balance Sheet Analysis Guide

The document provides a guide to understanding a balance sheet, which is a snapshot of a company's assets, liabilities, and shareholders' equity at a specific time. It explains how to read the balance sheet, detailing current and non-current assets, short and long-term liabilities, and the importance of shareholders' equity. Additionally, it highlights key ratios for financial analysis and encourages readers to seek assistance with accounting and reporting.

Uploaded by

tedy hermawan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Matthew Kyle

Chief Commercial Officer @weConnect

BALANCE SHEET GUIDE


Decode Your
Business Finances

Swipe Right

3-min read
What is it?
✅ It’s a snapshot of what your company owns and owes at a
specific point in time (like a picture 📸 ).

✅ You’ll find 3 key elements:


1. Assets
2. Liabilities
3. Shareholders’ Equity

✅ The Balance Sheet follows a simple Formula:


Assets = Liabilities + Equity

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How to Read it?
Assets Liabilities

Everything your company How much your company


owns owes
1.
Current Assets: Short term Liabilities:
The resources your company can quickly Debts or obligations your company needs
turn into cash to pay within 1 year
(within 1 year). (e.g. bills, loans, and payments to suppliers).

Non Current Assets: Long term Liabilities:


Assets taking longer 2.
to convert into cash.
To be paid over 1 year
Most Liquid
Cash and Cash Equivalents (e.g. loans, bonds, or lease payments).
Marketable Securities
Financial Assets
Accounts Receivable (AR) Shareholders’ Equity:
3.
GAAP

Inventory
IFRS

It shows you how much the owners have


Property, Plant, and Equipment
invested.
(Investments)
Intangible Assets Shareholder’s Total Total
Goodwill = -
Equity Assets Liabilities

4. Least Liquid

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Best Ratios to Analyse
✅ Interest Coverage:
“Can Your Profits Cover Interests Payments ?”

Profits Before Interest & Tax (EBIT)


=
Interest Costs

✅ Net Debt / Free Cash Flow:


“How much time would it take to pay down all debts ?”

Net Debt
=
Free Cash Flow

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Empower Your Business Decisions
with Balance Sheet Analysis

✅ From current assets to long-term liabilities, each line


item tells a part of your company's financial story.

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Need Help with your
Accounting & Reporting?

Want more info on Entity setup, International


Compliance, Accounting & Tax?

DM me for more insights

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Learned something?

Follow and hit the 🛎

Matthew Kyle
Chief Commercial Officer @weConnect

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