Bilanzrechner

What is a Balance Sheet

A balance sheet is a financial statement that provides a snapshot of a company’s financial position at a specific point in time. It follows the fundamental accounting equation: Assets = Liabilities + Equity. Balance sheets help stakeholders understand what a company owns (assets), what it owes (liabilities), and the owners’ residual interest (equity).

Key Sections and Components

Assets Section

Assets are resources owned or controlled by a company that have economic value and can provide future benefits.

Current Assets

Current assets are expected to be converted to cash or used within one operating cycle or one year, whichever is longer:

• Cash and Cash Equivalents: Highly liquid assets including currency, checking accounts, and short-term investments
• Accounts Receivable: Amounts owed to the company by customers for goods or services sold on credit
• Inventory: Products held for sale, raw materials, work-in-progress, and finished goods
• Prepaid Expenses: Future expenses that have been paid in advance
• Marketable Securities: Easily tradable investment securities expected to be sold within a year

Non-Current Assets

Non-current (or long-term) assets are expected to provide benefits for more than one year:

• Property, Plant, and Equipment (PP&E): Tangible long-term assets used in operations
• Intangible Assets: Non-physical assets like patents, trademarks, and goodwill
• Long-Term Investments: Securities and investments held for long-term strategic purposes
• Deferred Tax Assets: Future tax benefits from temporary differences

Liabilities Section

Liabilities are obligations that a company must pay in the future due to past transactions or events.

Current Liabilities

Current liabilities are due within one operating cycle or one year:

• Accounts Payable: Amounts owed to suppliers for goods or services purchased on credit
• Short-Term Debt: Loans and debt obligations due within one year
• Accrued Expenses: Expenses that have been incurred but not yet paid
• Unearned Revenue: Advance payments received for goods or services not yet delivered
• Current Portion of Long-Term Debt: The amount of long-term debt due within the current year

Long-Term Liabilities

Long-term liabilities are obligations due beyond one year:

• Long-Term Debt: Loans and debt obligations due beyond one year
• Bonds Payable: Debt securities issued by the company
• Deferred Tax Liabilities: Future tax payments from temporary differences
• Pension Obligations: Employee retirement benefit obligations

Equity Section

Equity represents the owners’ residual interest in the assets after deducting all liabilities:

• Common Stock: The par value of issued common shares
• Additional Paid-in Capital: Amount received from issuing shares above par value
• Retained Earnings: Accumulated net income not distributed as dividends
• Treasury Stock: The company’s own shares repurchased from the market (negative value)
• Accumulated Other Comprehensive Income: Unrealized gains and losses not in net income

The Accounting Equation

The fundamental accounting equation states that:

$$\text{Assets}=\text{Liabilities}+\text{Equity}$$

This equation must always balance, which is why it’s called a “balance” sheet. If the equation doesn’t balance, there is an error in the accounting records.

Financial Ratios

Liquidity Ratios

Liquidity ratios measure a company’s ability to meet short-term obligations.

Current Ratio

The Current Ratio measures a company’s ability to pay short-term obligations with its current assets.

$$\text{Current Ratio}=\frac{\text{Current Assets}}{\text{Current Liabilities}}$$

Example:

If a company has current assets of $100,000 and current liabilities of $50,000:

Current Ratio = 100,000/50,000 = 2.0x

This means the company has $2 in current assets for every $1 in current liabilities, suggesting strong short-term liquidity.

Quick Ratio (Acid Test)

The Quick Ratio is a more conservative measure of liquidity that excludes inventory, which may not be easily converted to cash.

$$\text{Quick Ratio}=\frac{\text{Current Assets}-\text{Inventory}}{\text{Current Liabilities}}$$

Example:

If a company has current assets of $100,000, inventory of $30,000, and current liabilities of $50,000:

Quick Ratio = (100,000 - 30,000)/50,000 = 1.4x

This indicates the company could pay its current liabilities 1.4 times over without relying on inventory sales.

Cash Ratio

The Cash Ratio is the most conservative liquidity measure, considering only cash and cash equivalents.

$$\text{Cash Ratio}=\frac{\text{Cash and Cash Equivalents}}{\text{Current Liabilities}}$$

Example:

If a company has cash and cash equivalents of $30,000 and current liabilities of $50,000:

Cash Ratio = 30,000/50,000 = 0.6x

This means the company can cover 60% of its current liabilities with its immediately available cash.

Working Capital

Working Capital represents the capital available for day-to-day operations.

$$\text{Working Capital}=\text{Current Assets}-\text{Current Liabilities}$$

Example:

If a company has current assets of $100,000 and current liabilities of $50,000:

Working Capital = 100,000 - 50,000 = $50,000

This indicates the company has $50,000 available to fund ongoing operations and growth.

Leverage Ratios

Leverage ratios measure the extent to which a company uses debt to finance its operations.

Debt to Equity Ratio

The Debt to Equity Ratio shows the proportion of equity and debt used to finance a company’s assets.

$$\text{Debt to Equity Ratio}=\frac{\text{Total Liabilities}}{\text{Total Equity}}$$

Example:

If a company has total liabilities of $200,000 and total equity of $100,000:

Debt to Equity Ratio = 200,000/100,000 = 2.0x

This means the company has $2 of debt for every $1 of equity, indicating significant leverage.

Debt to Assets Ratio

The Debt to Assets Ratio shows the percentage of a company’s assets that are financed by debt.

$$\text{Debt to Assets Ratio}=\frac{\text{Total Liabilities}}{\text{Total Assets}}$$

Example:

If a company has total liabilities of $200,000 and total assets of $300,000:

Debt to Assets Ratio = 200,000/300,000 = 0.67 or 67%

This indicates that 67% of the company’s assets are financed by debt.

Debt to Capital Ratio

The Debt to Capital Ratio shows the proportion of debt in the company’s capital structure.

$$\text{Debt to Capital Ratio}=\frac{\text{Total Debt}}{\text{Total Debt}+\text{Total Equity}}$$

Example:

If a company has total debt of $200,000 and total equity of $100,000:

Debt to Capital Ratio = 200,000/(200,000 + 100,000) = 0.67 or 67%

This means debt represents 67% of the company’s capital structure.

Financial Leverage

Financial Leverage shows how many assets a company has relative to its equity, indicating how leveraged the company is.

$$\text{Financial Leverage}=\frac{\text{Total Assets}}{\text{Total Equity}}$$

Example:

If a company has total assets of $300,000 and total equity of $100,000:

Financial Leverage = 300,000/100,000 = 3.0x

This means the company has $3 in assets for every $1 in equity, suggesting it is using significant leverage.

Benefits of Balance Sheets

Balance sheets provide several advantages:

• Financial Position: Shows what a company owns, owes, and the shareholders’ stake
• Liquidity Assessment: Helps evaluate short-term solvency through current assets and liabilities
• Capital Structure Analysis: Reveals the mix of debt and equity used to finance assets
• Trend Analysis: Facilitates comparison of financial position over multiple periods
• Investment Decisions: Provides crucial information for investors and creditors
• Regulatory Compliance: Satisfies regulatory requirements for financial reporting

Balance sheets, along with income statements and cash flow statements, form the foundation of financial analysis and are essential for evaluating a company’s financial health and stability.