Your understanding of the financial statement helps when computing financial metrics. For instance, when we calculate the return on assets, we know that we take the after-tax operating income from the income statement. We retrieve the average total assets from the balance sheet. Below, I am providing a brief balance sheet.
Assets = Liabilities + Owner’s Equity
ASSETS
Current Assets
Cash
Accounts Receivables
Inventory
Prepaid Expenses
Long-Term Assets
Land
Building
Machinery
Equipment
LIABILITIES
Current Liabilities
Accounts Payable
Wages and Salaries Payable
Taxes Payable
Interest Payable
Long-Term Liabilities
Notes Payable
Bonds Payable
OWNERS EQUITY
Beginning Balance
Net Income
Ending Balance
How is the information in the brief balance sheet related to what you already know?
