Unit 3 Balance Sheets Business Management Objectives zDistinguish between assets and liabilities. zGive examples of each category of assets and liabilities.

Slides:

Advertisements

Similar presentations

Evaluating Farm Financial Performance and Position How’s Business?

Advertisements

Financial Statement Analysis

Beef I Q - Financial Analysis. The primary emphasis of financial analysis is to properly assess business risk in the lending decision. Financial analysis.

Basic Accounting Principles

FARM AND RANCH CREDIT BASIC LENDING PRINCIPLES –HUMAN/MANAGEMENT FACTORS –FINANCIAL POSITION AND PROGRESS –REPAYMENT CAPACITY –COLLATERAL –LOAN PURPOSE.

Managing for Today and Tomorrow

Key Financial Indicators. Measures of liquidity  See equations 1 and 2; page 12 of booklet Measures of solvency  See equations 3 – 6; page 13 of booklet.

Foundations of Business

Financial Statement Analysis

Slide Show #14 AGEC 430 Macroeconomics of Agriculture Spring 2010.

Key Financial Indicators AGEC Spring 2010.

Copyright © 2003 Center for Farm Financial Management, University of Minnesota Financial Plan Your lender wants to know if your business will be financially.

Budget Planning, Implementation and Monitoring First Step: Understanding Financial Statements – Corporate Approach Chris Droussiotis September 2011 Lecture.

Balance Sheet. What is a Balance Sheet?  What is a balance sheet? –A balance sheet or commonly called “net worth statement” is a snapshot of a financial.

Copyright © 2007 South-Western. All rights reserved. Chapter 15 Accounting and Financial Analysis.

Financial Analysis Chapter #3. Net Worth Statement (Balance Sheet) Net Worth = Assets - Liabilities Net Worth (Owner's equity)

Financial Statements for a Sole Proprietorship

Analyzing Year End Financial Reports to Evaluate the Business Objectives:  The student will describe five key factors of year end financial analysis 

Parts of a Financial Statement 1.Statement of Income 2.Balance Sheet 3.Statement of Cash Flow 4.Statement of Stockholders’ Equity.

X100©2008 KEAW L15 X100 Introduction to Business Finance Professor Kenneth EA Wendeln Financial Analysis & Ratios Financial Analysis & Ratios.

STRIDENT- FINANCIALS BY - RAHUL JAIN. Three Basic business Activites Financing activities : z Financing activities : - Owners contribute cash and receive.

Financial/Ratio Analysis

Essential Standard 4.00 Understanding the role of finance in business. 1.

Intro to Financial Management Understanding Financial Statements and Cash Flows.

Parts of a Financial Statement 1.Statement of Income 2.Balance Sheet 3.Statement of Cash Flow 4.Statement of Stockholders’ Equity.

Intro to Financial Management Evaluating a Firm’s Financial Performance.

Financial Statements for a Sole Proprietorship Making Accounting Relevant Financial statements provide information to owners and managers about how the.

Bankrupt or Billionaire: What’s the Business Financial Position? Balance Sheet Basics.

Overview of Financial Statement Analysis Chapter I.

Financial Statement Analysis. Two Primary Statements Balance Sheet –Snapshot –BV vs MV Income Statement –Period of time.

Essential Standard 4.00 Understanding the role of finance in business. 1.

Analyzing Financial Statements. Financial Statements enhance the decision making ability and offer a means to assess the status of a business. They are.

The Analysis of Financial Statements

Chart of Accounts.

Financial Management Returning To The Farm University of Nebraska- Lincoln.

FINANCIAL STATEMENT ANALYSIS

Section 3The Balance Sheet What You’ll Learn  The purpose of a balance sheet.  How to prepare a balance sheet.  How to analyze information on financial.

Financial Statement Analysis

Completing and Analyzing the Balance Sheet

Net Worth Statements Ag Business Management Spring 1999.

RELATIONSHIP BETWEEN FINANCIAL STATEMENTS FINANCIAL STATEMENTS AS A SYSTEM.

Capital Leases Vs. Operating Leases

TWO IMPORTANT FINANCIAL STATEMENTS SBM 110. INCOME STATEMENT The income statement’s primary role is to show a profit or loss over time. Using the difference.

Preparing Financial Statements. 2LESSON 7-1 INCOME STATEMENT INFORMATION ON A WORK SHEET page 182.

CHAPTER 4 QuickBooks QuickBooks Develop Balance Sheets and Profit & Loss Statements (Income Statements) Develop Better Management Practices.

FINANCIAL STATEMENTS FOR A SOLE PROPRIETORSHIP Chapter 9.

Finanacial Statements Balance Sheet & Profit and Loss Account.

Balance Sheet Record Keeping Curriculum Georgia Department of Education Agricultural Education Written by Jimmy Scott Georgia Ag Ed Curriculum.

Finance Citi Funded Entrepreneurship Training Program UNIVERSITY OF DUBAI Dr. Zahi Yaseen.

Purposes Evaluation of loan applicant “Big” picture view Variety of information and sources to help in evaluation of applicant.

16 Lesson Plans to Prepare Small and Mid-scale Farmers to Enter Food Hubs, Groceries, Restaurants and Cooperatives.

Pre – MBA Program Accounting Ratios Nov 11, 2012.

Financial Statement Analysis

The Balance Sheet & Its Analysis (Chapter 5)

Financial Report GlaxoSmithKline plc from 2004 to 2011 Prepared by:

Financial/Ratio Analysis

Financial Statement Analysis

Final Accounts Ms. Zucchero.

Dollars and Decisions Chapter 3 Balance Sheet.

Importance of Year End Reporting

Accounting and Financial Information

Intro to Financial Management

Financials Revenue Estimates Revenue Assumptions for Month 1

Intro to Financial Management

Financial Structure Analysis: the Balance Sheet 常用的財務報表

Point 6 Financial Statements

RVS Institute of Management Studies FINANCIAL REPORTING AND ANALYSIS

Review Analyzing Financial Statements

Presentation transcript:

Unit 3 Balance Sheets Business Management

Objectives zDistinguish between assets and liabilities. zGive examples of each category of assets and liabilities. zDescribe the structure and major components of a balance sheet. zAccurately transfer financial information to a balance sheet.

Statement of Cash flows Business Analysis Balance Sheet Income Statement Feasibility Liquidity Repayment Capacity Profitability Financial Efficiency Risk Solvency Statement of Owner’s Equity

Purpose of a Balance Sheet zShows financial condition at a specific point in time. solvency yShows solvency (do assets exceed liab. ?) liquidity yMeasure liquidity (will firm meet financial obligations?)

Purpose of Balance Sheet zFinancial Condition - cont. yEvaluate risk-bearing capacity (how much loss could business sustain?) yIdentify collateral (avail. to support loan) yCompare records over time to see trends.

Components of Balance Sheet zAssets zLiabilities zOwner Equity

Assets zCurrent yUsed or sold and converted to cash within 12 months zNon-current yUsed in producing a product or not sold and not converted into cash within 12 months.

Liabilities zCurrent yPayable within one year. zNon-current yDue in more than one year.

Owner Equity zTotal assets - Total liabilities zSame as Net Worth

Analysis zLiquidity yWorking Capital=CA-CL xCash available to run the business. yCurrent Ratio= CA/CL xMinimum- 1.0 xBench mark- 2.0

Analysis zSolvency yDebt-to-Asset Ratio=TL/TA xMeasures risk exposure of the business. xBenchmarks 0.5 or lower

Analysis zSolvency yEquity-to-Asset=OE/TA xMeasures percent ownership of the business. xBenchmarks Higher % the better

Analysis zSolvency yDebt-to-Equity=TL/OE x Leverage ratio-Measures debt capital usage compared to owner capital usage. xBenchmarks 1 : 1

Analysis zValuation of Assets is important to ratio evaluation. zMarket value of assets gives a broader picture so must include all liabilities. zCost valuation is more conservative and lower risk but probably not as true a picture of current financial condition.