Balance sheet Essay Example | Topics and Well Written Essays - 1500 words

Balance yellow journalism - Essay ExampleIt can also facilitate managers to establish policies and strategies for the future.This paper provides information about the importance of balance sheet and its uses for investors and management. It also provides an insight into the ratio analysis that could be d unity on the backside of information obtained from balance sheet. The paper shows calculation and analysis of ratios from the balance sheet of Palaron Plc so as to understand the usefulness of information presented in the balance sheet for investors.Balance sheet plays a vital role in depicting the financial position of a ships company. It further shows whether an investor should invest in a busy company or not. A companys balance sheet also shows the strengths and weaknesses of a company. A company through its balance sheet portrays its financial position to the investors that it is a reliable company that possesses prosperous prospect and chances to grow. It also reflects what ever the goals experience been set by the company will definitely be accomplished and delivered to the investors in the shape of cash or stock divid terminuss. Birts also says that the company must demonstrate its ability to trade for some time into future so that customers have confidence that it will be able to meet its commitments to them (2001, p36). Investors would learn from the balance sheet a companys long-term investments, capital structure, liquidity and gearing position so as to analyse if the company would be able to remain in business for a longer period of time. The balance sheet at the end of the year demonstrates the total assets and liabilities made by the company. There are two types of assets current assets and fixed assets. period assets include all the assets that are for less than one year i.e. cash, accounts receivable (with deduction of bad debts expenses), notes receivable, prepaid expenses incurred and merchandise inventory where as fixed assets include a ll those fixed assets which can transcend for more than than one year i.e. machinery, equipment, land, building and plant assets etc. The depreciation and amortization are deducted from these fixed assets. Liabilities are also of two types current liabilities and non current liabilities. Current liabilities include debt which is payable in year i.e. accounts payable, notes payable, accrued expenses and insurance premium etc while long term liabilities includes bonds payable etc. These are not overflowing because for a complete balance sheet it also includes owners equity which includes total invested capital and retained earnings. The balance sheet is not only essential for the investors hardly also to large extent to the company itself. It gives the financial conditions of a company that where it stands at a particular time and show the real minus and positivist points. In order to get the things on credit or need some credit to invest in the business to earn amplify capabilit y gains, balance sheet items i.e. powerful fixed and current assets would help in getting the credit (Birts, 2001). With the help of balance sheet it becomes easier for a company to devise decisions and prepare the plans for future and it can also know about the reason of being unsuccessful in the business, it further gives a complete outlook of the company progress which helps a company to get rid of barriers and obstacles in the way of