Friday, July 21, 2006

Components of the balance sheet

The balance sheet can be further broken down to its various components. Reminds me of chemistry when a molecule can be broken down into atoms, and one atom can be broken down into electron, neutron, protron and recently they discovered even these can be broken down into G-strings or something.

So, in the balance sheet, assets can also be broken down into current assets and non-current assets. Liabilities can be broken down into current liabilities and non-current liabilities. These sub-levels will consist of individual components that makes up the basic building blocks (yes, that's it, no more G-strings) of the balance sheet. Below is a not-so-short list of important items to know:

Assets

- Current Assets
  • Cash
  • Marketable securities or short-term investments
  • Accounts Receivables
  • Inventory
- Non-current Assets
  • Fixed Assets (Property, Plant and Equipment (PP&E)
  • Intangibles
  • Long-term investments
Liabilities

- Current Liabilities
  • Accounts payables
  • Short-term borrowing (short-term debt)
- Non-current Liabilities
  • Long-term borrowings (long-term debt)
  • Other long-term liabilities (pension liabilities, deferred tax liabilities etc)

Shareholders' Equity

  • Paid-in capital
  • Retained earnings
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