2 Workhorse Group Balance Sheet And Income Statement Download 2 Workhorse Group Balance Sheet And Income Statement
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Understanding the different types of financial statements that can be prepared for your business and being fluent with the information each contains helps you better understand your financial position and make more informed decisions about your business. Remember - forewarned is forearmed...and you can t manage until you measure! That being said I have found that a critical measuring tool - the Balance Sheet - is often overlooked by small business owners - likely because they don t understand its importance. Let s see if we can change that... The Balance Sheet is merely a snapshot of your company s financial position as of a given point in time. Today s balance sheet could be different tomorrow - simply by writing out a check or invoicing a client. This financial statement provides the details your assets liabilities and equity - the three components of a business financial accounting - as of a particular date. Although balance sheets may be created as of any date they are typically prepared at the end of an accounting period such as a month quarter or year.
Before the disaster the only thing that had any importance was whether a potential buyer of anything could afford to make the payments on whatever he was buying assuming he made 120% of his stated income. The most outrageous symptom was that people would take appreciating home equity and borrow against it to buy depreciating assets and consumer goods. They overbooked their budgets and now they have gutted their balance sheet. The resulting loss of home values is the disaster we have now where people have either a zero or minus Net Worth. The other aspect is that we are now wiser. For the good of our society and our financial infrastructure we had better be. Going forward we must pay attention to our Balance Sheets and recognize that is where the gold is.
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A third way is that you can sell off assets at a gradual pace to fund your budgetary needs as you age. A reverse mortgage is a good example of this. Assets and Liabilities You need to know what an asset is and what a liability is. You also need to know that there are different kinds of assets and different kinds of liabilities. An asset is an item of value that you own. It has a market value that is the amount that you can sell it for. The value is what the item would sell for if you had to sell it in the short term which may be days or months depending on the asset. When valuing your assets you must consider this and be honest about exactly how much your asset would sell for in the short term. The total value is written down as the asset on your balance sheet.