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Showing posts from September, 2023

How to read balance sheet

  Checking a company's balance sheet is a fundamental step in auditing and financial analysis. Here's a step-by-step guide on how to check a company's balance sheet: Assets: Current Assets: These are assets expected to be converted into cash or used up within one year. Common examples include cash, accounts receivable, inventory, and prepaid expenses. Pay close attention to the aging of accounts receivable and the valuation of inventory. Non-Current Assets: Also known as long-term assets or fixed assets, these have a useful life beyond one year. They include property, plant, equipment (PP&E), investments, and intangible assets like patents and goodwill. Scrutinize depreciation methods and the impairment of intangible assets. Investments: Examine the details of investments, particularly if the company holds significant stakes in other companies (equity method accounting) or has bonds and other securities. Liabilities: Current Liabilities: These are obligations due within