Accounts Receiveable
A balance sheet is a financial statement that provides a snapshot of what a business owns an owes, as well as the amount invested by shareholders. It provides a basis for computing rates of return and evaluating the company's capital structure . Along with other important financial statements such as the statement of cash flows in the income statement, a balance sheet is used in conducting fundamental analysis or calculating financial ratios.
A balance sheet’s formula, or equation, is simple and intuitive: assets equal liabilities plus equity. In other words, a business must pay for the things it owns (assets) through either taking on liability (borrowing) or issuing shares to investors.
In essence, a balance sheet is a snapshot of the company’s financial standing at a given moment in time. Taken alone, it does not give a sense of trends that will play out over a longer timeframe. That’s why balance sheets are compared with ones from previous time periods and with balance sheets of other businesses in the same industry. Investors can get a sense of a company’s health by looking at, among others, the debt-to-equity ratio, and the acid-test ratio.
There are limitations to a balance sheet. Although it’s a good reflection of the assets and liabilities a company owns, it is static and only applicable to a certain time period. That’s why it’s important to draw on data in the income statement and statement of cash flows to paint a fuller picture of the company’s standing.
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Ready for the future of accounting? Botkeeper provides automated bookkeeping support to businesses by using a powerful combination of skilled accountants alongside machine learning and artificial intelligence (AI). Our clients receive 24/7 accounting and support as well as incredible insight into their financials with beautiful dashboards and unlimited reporting.
Botkeeper provides bookkeeping to businesses using a powerful combination of skilled accountants and automated data entry through the use of machine learning and AI.