Reading a Sample Balance Sheet

1. Reading a Sample Balance Sheet Professor Ronald Miolla

2. Agenda • 1) Major components of the Balance Sheet. • 2) Putting it all together: sample statement. • Assets, Liabilities, Owners’ Equity

3. 1) Major Components • Assets • Liabilities • Owners’ Equity • A = L + OE • Shows how the company is financed. • Published at a point in time.

4. 2) Sample Balance Sheet • 12/31/12 • Current Assets • Cash $ 200,000 • Marketable Securities 400,000 • Accounts Receivable 600,000 • Inventory200,000 • Total Current Assets1,400,000

5. Sample Balance Sheet • Total Current Assets 1,400,000 • Fixed Assets • Plant and Equipment 2,000,000 • Accumulated Depreciation 400,000 • Net Plant & Equip.1,600,000 • Total Assets 3,000,000

6. Sample Balance Sheet • Current Liabilities • Accounts Payable 100,000 • Notes Payable 200,000 • Total Current Liabilities 300,000 • Long-term Liabilities • Loans (20 years) 1,000,000 • Total Liabilities 1,300,000

7. Sample Balance Sheet • Owners’ Equity • Common Stock 1,000,000 • Retained Earnings 700,000 • Total Owners’ Equity 2,700,000 • 3,000,000 = 1,300,000 + 1,700,000

8. Summary • Assets = Liabilities + Owners’ Equity. • Published on a specific date. • Shows how the company is financed.