1. ICT2641: Chapter 3: Explanation of Balance Sheet

2. What is a Balance Sheet? Indicates business value : the 2 “O’s”
What business owns (+)
What the business owes (-)
Total Cash in = Total Cash out

3. What is required to understand this presentation?
Please print out the document under additional material:
ICT2641_Example_of_Question.pdf
ICT2641_PP_Balance_Sheet Presentation.ppt (this is a printout of the slides used in the presentation)

4. Investors, loans (bank @ certain interest rate)
CASH IN?
Owners contribution (e.g. inheritance, saving, pension money) R +
Investors, loans certain interest rate)
R900 15% interest =
TOTAL CASH IN (R )

5. CASH OUT? Consists of Total Assets Managed:
Fixed assets (buildings purchased by owner)
R ) +
Equipment and stock (raw materials) R -
3. Money owned to suppliers of stock R =
4. Total Cash Out R
TOTAL CASH OUT MUST BALANCE WITH TOTAL CASH IN! See page 69 to 71 in TL201

6. Balance Sheet based on data provided on lefthandside
The following figures were taken from the statements of Sharp Shooter Air Rifle Manufacturers:
Balance Sheet based on data provided on lefthandside
Cash Resources In: R
Owner’s equity R
Owners (Equity)
Long-term loans R
@ 15% interest
Lenders (Loans)
Current liabilities (creditors plus overdraft) R
Total Cash In
Fixed assets (land, buildings, plant and equipment) R
Productivity Capacity :
Current assets (stock plus debtors) R
Fixed assets
Annual sales R
Raw Material & Work in Process (WIP)
Cost of sales R
Total Assets Managed
Operating expenses R
Cash Owed to Suppliers
( )
Tax rate
35%
Owner’s expected return on his investment
40%
Total Cash Out

7. Balance Sheet based on data provided on lefthandside
The following figures were taken from the statements of Sharp Shooter Air Rifle Manufacturers:
Balance Sheet based on data provided on lefthandside
Cash Resources In: R
Owner’s equity R
Owners (Equity)
Long-term loans R
@ 15% interest
Lenders (Loans)
Current liabilities (creditors plus overdraft) R
Total Cash In
Fixed assets (land, buildings, plant and equipment) R
Productivity Capacity :
Current assets (stock plus debtors) R
Fixed assets
Annual sales R
Raw Material & Work in Process (WIP)
Cost of sales R
Total Assets Managed
Operating expenses R
Cash Owed to Suppliers
( )
Tax rate
35%
Owner’s expected return on his investment
40%
Total Cash Out

8. Balance Sheet based on data provided on lefthandside
The following figures were taken from the statements of Sharp Shooter Air Rifle Manufacturers:
Balance Sheet based on data provided on lefthandside
Cash Resources In: R
Owner’s equity R
Owners (Equity)
Long-term loans R
@ 15% interest
Lenders (Loans)
Current liabilities (creditors plus overdraft) R
Total Cash In
Fixed assets (land, buildings, plant and equipment) R
Productivity Capacity :
Current assets (stock plus debtors) R
Fixed assets
Annual sales R
Raw Material & Work in Process (WIP)
Cost of sales R
Total Assets Managed
Operating expenses R
Cash Owed to Suppliers
( )
Tax rate
35%
Owner’s expected return on his investment
40%
Total Cash Out

9. Balance Sheet based on data provided on lefthandside
The following figures were taken from the statements of Sharp Shooter Air Rifle Manufacturers:
Balance Sheet based on data provided on lefthandside
Cash Resources In: R
Owner’s equity R
Owners (Equity)
Long-term loans R
@ 15% interest
Lenders (Loans)
Current liabilities (creditors plus overdraft) R
Total Cash In
Fixed assets (land, buildings, plant and equipment) R
Productivity Capacity :
Current assets (stock plus debtors) R
Fixed assets
Annual sales R
Raw Material & Work in Process (WIP)
Cost of sales R
Total Assets Managed
Operating expenses R
Cash Owed to Suppliers
( )
Tax rate
35%
Owner’s expected return on his investment
40%
Total Cash Out

10. Total Cash in = Total Cash Out
The following figures were taken from the statements of Sharp Shooter Air Rifle Manufacturers:
Balance Sheet of Sharp Shooter Air Rifle Manufacturers based on data provided on lefthandside
Cash Resources In: R
Owner’s equity R
Owners (Equity)
Long-term loans R
@ 15% interest
Lenders (Loans)
Current liabilities (creditors plus overdraft) R
Total Cash In
Fixed assets (land, buildings, plant and equipment) R
Productivity Capacity :
Current assets (stock plus debtors) R
Fixed assets
Annual sales R
Raw Material & Work in Process (WIP)
Cost of sales R
Total Assets Managed
Operating expenses R
Cash Owed to Suppliers
( )
Tax rate
35%
Owner’s expected return on his investment
40%
Total Cash Out
Total Cash in = Total Cash Out

11. End of the Balance Sheet Presentation
End of the Balance Sheet Presentation. Please proceed to Income Statement Presentation.