The Balance Sheet Discussion:

Referencing this week’s readings and  lecture, what information is provided in the balance sheet? What is a  common-sized balance sheet and how do you create one? For your final  project company, does anything stand out on the balance sheet?

Respond to at least two of your classmates’ posts.

Required Resources

Text

Epstein, L. (2014). Financial decision making: An introduction to financial reports [Electronic version]. Retrieved from https://content.ashford.edu/

• Chapter 2: The Balance Sheet

Articles

Ford Motor Company. (2014). Ford Motor Company 2012 annual report (Links to an external site.)Links to an external site..  Retrieved from  http://corporate.ford.com/content/dam/corporate/en/investors/reports-and-filings/Annual%20Reports/2012-annual-report.pdf

Harper, D. (n.d.). Financial statements: The system (Links to an external site.)Links to an external site.. Investopedia. Retrieved from http://www.investopedia.com/university/financialstatements/financialstatements2.asp

EDWARDS DISCUSSION PLEASE REPLY:

A balance sheet shows what money has previously been spent on a  daily, weekly, monthly or yearly basis along with future payments and it  shows what money has been credited to the account. It also shows  anything that an organization owns or controls such as properties,  equipment, securities, prepaid expenses and inventory. Assets can be  used right away and later which can be cash or stocks, but stocks or  securities that are used long term are more likely to be goods instead  of currency. Liabilities are included as well, which can include loans,  income taxes that have to be payed and wages. Liabilities can also be  broken down on a balance sheet where they are used for short and long  term.

Liabilities that have to be paid right away or within a year are  considered creditor accounts, while long term liabilities can consist of  pensions, long term loans, and capital leases. “Equity indicates the  proportion of a company’s assets that can be claimed by owners and can  be in the form of stockholders’ equity, common stock, preferred stock,  retained earnings and treasury stock, and additional paid-in capital”  (Thermond, 2014, para. 3). A common-sized balance sheet is similar to a  balance sheet, but it includes percentages for a company’s assets,  equity and liabilities. It can be created by “developing a formula to  divide each line item in the assets section by total assets and  developing a formula to divide each line item in the liabilities and  equity section by total liabilities and equity” (Epstein, 2014, p. 2.3).  On the Electronic Arts balance sheet, the debts stand out because they  are in the hundred million range over a 5-year period and their cash  stands out because it is in the billions.

References

Epstein, L. (2014). Financial decision making: An introduction to financial reports. Retrieved from https://content.ashford.edu/books/AUOMM622.14.1/sections/sec1.3?search=equity#w10704 (Links to an external site.)Links to an external site.

Thermond, J. (2014). Mastering the balance sheet can make or break a startup. Forbes. Retrieved from http://www.forbes.com/sites/xseedcapital/2014/03/27/mastering-the-balance-sheet-can-make-or-break-a-startup/ (Links to an external site.)

QUENTINS DISCUSSION PLEASE REPLY:

The  information provided on the balance sheet are the assets, liabilities,  and the equity. “Assets can be grouped into current assets and long term  assets” (Cain, 2018, Week 2 Lecture), which can be those used within  certain timeframes, short or long. Liabilities are those items that the  company owes that include short (monies due within 12 months) and  long-term (due more than 12 months) items as well, like assets (Epstein,  2014). Equity “shows the claims that owners have against the assets of  the company” (Epstein, 2014, p. 2.1). In other words, equity is the  portion of the company that stakeholders can claim via “stockholder’s  equity, common stock, preferred stock, retained earnings and treasury  stock, and additional paid-in capital” (Cain, 2018, Week 2 Lecture).

The common-sized balance sheet is a more concise sheet that shows the  comparison based on percentages than dollars. It shows both percentages  and dollars as they relate to the assets, liabilities, and the equity  accounts. Any line item is directly compared to the value of total  assets, liabilities, and equity. This balance sheet is created by  “Develop(ing) a formula to divide each line item in the Assets section by Total Assets… then develop(ing)  a formula to divide each line item in the Liabilities and Equity  section by Total Liabilities and Equity” (Epstein, 2014, p. 2.3). For  Nike, their liabilities have significantly been lower than the total  assets over a four year period. There was a slight drop experienced in  2016 for the assets line, but an increase is evident for 2017.

Cain, M. (2018). Week 2 Lecture. Retrieved from              https://ashford.instructure.com/courses/21789/pages/week-2-weekly-lecture?module_item_id=1104016

Epstein, L. (2014). Financial decision making: An introduction to  financial   reports. Retrieved from  https://content.ashford.edu/books/AUOMM622.14.1/sections/sec1.3?search=equity#w10704

Nasdaq. (2018). Nike Company Financials. Retrieved from              https://www.nasdaq.com/symbol/nke/financials?query=balance-sheet