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Balance Sheet 101
Balance Sheet At a Glance
What you own, what you owe, what's yours.
The Balance Sheet lists what the company owns, what it owes, and what is left over for the owners on one day. The two sides always match: every dollar of stuff you own is claimed by a lender, a vendor or you.
Assets = Liabilities + Equity (it always balances)
Example company · as of month endWhat it OWNS$470,000
Who has a CLAIM$470,000
- Current Assets
- Fixed Assets
- Current Liabilities
- Long-Term Liabilities
- Owner's Equity
Every line, in plain words
Current Assets
Cash, or things that turn into cash within a year.
Cash $85K, accounts receivable $120K, materials inventory $15K, prepaid expenses $10K
$230,00048.9% of assets
Fixed Assets
Long-lasting things you use to do the work.
Trucks & equipment $420K, less accumulated depreciation ($180K)
$240,00051.1% of assets
Total Assets
Everything the company owns.
Current Assets + Fixed Assets
$470,000$230K + $240K
Current Liabilities
Bills and debts due within the next 12 months.
Accounts payable $45K, credit cards $10K, accrued payroll & taxes $20K, loan payments due this year $35K
$110,00023.4% of assets
Long-Term Liabilities
Debt due after the next 12 months.
Truck & equipment loans, less the payments due this year
$120,00025.5% of assets
Owner's Equity
What the owners truly own after every debt is paid.
Assets − Liabilities. Owner investment $50K + retained earnings $178.9K + this year's net profit $11.1K
$240,000$470K − $230K
Working Capital
The cushion to cover short-term bills.
Current Assets − Current Liabilities
$120,000
Current Ratio
Current assets for every $1 due this year.
Current Assets ÷ Current Liabilities
2.1 : 1
Debt-to-Equity
How much the company leans on borrowed money.
Total Liabilities ÷ Owner's Equity
0.96
Try it with your own balance sheet
Starts with the example company's numbersYour cushion and your debt load
Type in the four subtotals from your own balance sheet. Equity is what's left after the debts.
- Current assets
- Fixed assets
- Current liabilities
- Long-term
- Equity
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