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Friday, February 18, 2011

Analysing Performance Of The Balance Sheet

The balance sheet for your business gives you a 'snapshot'
view of what the business is worth, its assets and liabilities, at
one particular moment in time. Usually this is at the end of the
financial year and allows you to compare the situation of the
business from one year to the next but you can also draw up
quarterly or even monthly balance sheets. The balance sheet
should be produced once your trading profit and loss account
has been drawn up.

The Balance Sheet

A balance sheet shows:

-The financial situation of the
organisation at a particular time

-The change from one period
(usually a year) to the next

-How much money is in the business

-The balance of assets Vs liabilities
and fixed assets Vs liquid assets

A balance sheet is concerned with 3 things:

Assets

Liabilities

Capital

What Can The Balance Sheet Tell You?

A balance sheet can tell you how much the business or organisation is worth. For
community-based organisations it also can tell you how much the community has
increased the assets under its control and therefore how powerful or healthy it is.
This can only ever be a ’general’ figure, showing the underlying value of the funds
in the organisation at that particular time. No-one can safely predict the future. But
compared with previous years it is a simple measure of performance.

1 comment:

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