The Balance Sheet-Current

Abstract

A balance sheet represents the position at one particular moment. Some aspects can change more quickly and easily than others and the analyst must consider how the varying rates of change can interact with each other. The balance sheet, even more than the profit and loss statement, is a form of shorthand which presents in monetary form assets which in most cases are not money at all. The figures are merely more or less credible estimates of the amount for which the assets can be sold or of the cost to replace them. The actual money value can differ widely for many reasons, but the difference between a forced sale and one in the normal course of business is probably the most important, so that the view of a going concern analyst is very different to that of a liquidation analyst. This chapter and the next look at the individual items which appear on the balance sheet, broken down into five main categories which in turn are further subdivided. The categories are: current assets; current liabilities; non-current assets; non-current liabilities; and net worth.