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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?


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