BALANCE SHEET FORMULA ASSETS = LIABILITES + SHAREHOLDERS’ EQUITY OR WHAT THE BUSINESS OWNS = WHAT IS OWED TO OTHERS + SHAREHOLDERS’ EQUITY ASSETS – LIABILITIES = SHAREHOLDERS’ EQUITY ASSETS – LIABILITIES = NET WORTH OR OR
BALANCE SHEET FORMULA (A Balance Sheet Must Balance) CURRENT ASSETS Cash $xxxxxxxxx Receivables $xxxxxxxxx Inventory $xxxxxxxxx Total Current $xxxxxxxxx FIXED ASSETS Land Improvements $xxxxxxxxx Equipment $xxxxxxxxx Depreciation ($xxxxxxx) Total $xxxxxxxx TOTAL ASSETS $ xxxxxxxx CURRENT LIABILITIES Trade Payables $xxxxxxx Accrued Expenses $xxxxxxx Current portion of Long-Term Debt $xxxxxxx Total Current $xxxxxxx Long Term Debt $xxxxxxx TOTAL LIABILITES $xxxxxxx SHAREHOLDERS EQUITY Paid In Capital $xxxxxxx Capital Surplus $xxxxxxx Retained Earnings $xxxxxxx Total $ xxxxxxx TOTAL LIABIITIES & S-H EQUITY $ xxxxxx
Net Income + Depreciation +/- Working Capital Changes
Cash Flows from Investing (Purchases and Sales of Assets)
Cash Flow From Financing (From Debt and Payments of Debt and Dividends)
STATEMENT OF CASH FLOWS IS NECESSARY Because revenues reported do not always equal cash collected. . . . . . and expenses reported do not always equal cash paid . . . Income is usually not equal to the change in cash for the period.
STATEMENT OF CASH FLOWS +/- Cash Generated or Used as the Result of Operations +/- Cash Invested or Provided from Investment or Capital Activities +/- Cash Paid or Received as the Result of Financing Activities = Increase or Decrease in Cash