1-2
FINANCIAL STATEMENT ANALYSIS
BALANCE SHEET
Conditions at a
point in time
The Balance Sheet is a record of assets held by a business and capital
used to pay for those assets. It is a snapshot of conditions at a specific
point in time, generally at the end of a quarter or year. A typical
Balance Sheet looks like the example for XYZ Corporation (Figure
1.1).
XYZ Corporation
December 31, 1993
(In Millions $)
ASSETS
LIABILITIES AND EQUITY
Cash
5.7
Accounts Payable
22.7
Marketable Securities
6.3
Notes Payable
31.5
Accounts Receivable
50.9
Accrued Wages and Taxes
2.3
Inventories
88.7
Other Current Liabilities
4.9
Prepaid Expenses
1.1
Total Current Liabilities
61.4
Other Current Assets
0.3
Total Current Assets
153.0
Long-term Debt
107.4
Preferred Stock
12.3
Gross Fixed Assets
158.8
Total Long-term Liabilities
181.1
Less Depreciation
24.9
Net Fixed Assets
133.9
Common Stock (8 Mil. Outst.)
10.4
Retained Earnings
95.4
Total Common Equity
105.8
Total Assets
286.9
Total Liabilities and Equity
286.9
Figure 1.1: Balance Sheet
Let's look at a definition of each account in XYZ Corporation's Balance
Sheet.
Assets
Assets are used to produce the products or generate the services that are
sold by the company. Although all assets are stated in monetary terms,
only cash represents actual money.