Importance Of Balance Sheet Template For Company

balance sheet templatePurpose of a balance sheet template

The balance sheet is a very important financial statement that provides a summary of a company’s assets (what it owns) and liabilities (what it owes). It is used to help assess the financial strength of a company. Distribution of a company’s resources can be seen on the balance sheet and comparing the information with similar companies can provide some idea of how a company is performing in relation to others in the industry. The balance sheet provides a company’s net worth at a specific point in time. Net worth is calculated by subtracting the total amount of liabilities from the total amount of assets. A balance sheet template can be used for making your own balance sheet.

Elements of a balance sheet

A balance sheet has two main sections:

  1. Assets
  • Current assets – Current assets may include cash (cash, balances in checking and savings accounts), accounts receivable, inventory and prepaid expenses such as insurance or rent.
  • Fixed assets – These assets include long term investments, property and equipment (land, buildings, equipment, tools, etc.) offset by accumulated depreciation and intangible assets (contracts, copyrights, patents, trademarks, and goodwill).
  • Other assets – Assets such as deferred income tax deductions
  1. Liabilities
  • Current liabilities – Obligations to be paid within one year, including accounts payable, short term loans, income taxes payable, wages, and the current portion of long term debt.
  • Long term liabilities – Includes long term debt such as loans and mortgages, capital lease obligations, and deferred income tax.

The net worth or owners equity is the total liabilities subtracted from the total assets (Net worth = Total assets – Total liabilities). A sample balance sheet is shown here:

ASSETS

Current Assets

Cash 10,000.00

Accounts receivable 20,000.00

Inventory 100,000.00

Total Current Assets 130,000.00

Non-Current Assets

Plant and equipment 60,000.00

Business premises 700,000.00

Vehicles 50,000.00

Total Non-Current Assets 810,000.00

TOTAL ASSETS 940,000.00

Current Liabilities

Accounts payable 20,000.00

Bank overdraft 5,000.00

Credit card debt 5,000.00

Tax liability 25,000.00

Total Current Liabilities 55,000.00

Non-Current Liabilities

Long term business loan 1 250,000.00

Long term business loan 2 100,000.00

Total Non-Current Liabilities 350,000.00

TOTAL LIABILITIES 405,000.00

NET ASSETS 535,000.00

OWNERS EQUITY 535,000.00

You can use the above as a balance sheet template. If you aren’t sure how to make your own balance sheet or need help with financial analysis ratios, one option is to contact our service for help.

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