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The importance of the company’s non-current assets volume is based on its sector’s type. Fixed assets such as lands, buildings, machinery and so on, come under non-current assets. Some of the important current assets for companies:Īssets that the company owns and needs more than a year to convert into cash or it is the asset that the company does not have a plan to convert to cash during the next year. We can generally say that increasing the company’s current net asset means an increase in the company’s opportunities in maintaining its growth. If the company suffers from a decline in its current assets then that means it needs to find new means to finance its activities. It is an important indicator of the company’s financial status because it is used to cover short term obligations of the company’s operations. Generally, a company’s assets are categorized according to the ability to convert it into cash in two types:Ĭash and other properties owned by the company and could be easily converted into cash in one year. It can also have intangible assets such as trademarks, copyrights or patents. Companies can own tangible assets such as computers, machinery, money and real estate. One of the differences between an individual and a company’s assets is the company’s obligation to publish what it owns to the public. Similarly, companies can own assets as well. Individuals own assets of great value such as real estate or jewelry. It is possible to summarize the three elements which, as a whole, generate the balance sheet for a company as the following: It means that it is possible to compare the performance of two companies in two different sectors. Although the numbers shown in the companies’ statement of financial position vary greatly, but the general framework of the statements of all companies remain united. This could be a strong indicator that the company handles its assets badly.

Reading the balance sheet enables the investor to know if there is additional excess shares, more than the market need, as a result of the management’s inaccurate assumption of the expected demand on the products. That’s not only what the company’s balance sheet could explain it can also point out the sufficient amount of available assets that help in expanding its business through the acquisition of another company or to develop a new product or even resort to borrowing to maintain its operational activities. It is a known fact that it is not a good sign if the company’s liabilities outperformed its assets because that means that its losses exceeded the capital which could lead to the company’s bankruptcy or its inability to practice business. The balance sheet includes the company’s assets, liabilities and shareholders’ equity which gives a clear idea on its book value. It represents a detailed image of the company’s financial status when published.

​Originally, the balance sheet is included in the first part of the quarterly financial statement.