More than a Summary
A balance sheet describes how well the financial condition of a business can support its trading operations. That's why the quality of the balance sheet forecasts you produce using Figurwizard are as important as the ones for profits.
Fixed Assets
Capital items not intended for resale, which are vital to business operations, describe fixed assets.
They are shown at “net book value” after depreciation has been deducted from their cost. With the sole exception of company cars the net values of fixed assets are always calculated from cost excluding VAT less depreciation. Cars however are calculated from cost including VAT less depreciation as VAT is not reclaimable as input tax for company cars.
Because fixed assets are not intended for resale, they play no part in calculating the liquidity of a business.
Current Assets
Sometimes known as "liquid assets" current assets represent the cash convertible nuts and bolts that support the trading operations of the business.
The principal current assets in order of importance are cash and cash equivalents, accounts receivable, stock / inventory of finished goods and work in progress. Maintaining efficient control of accounts receivable and avoiding having more merchandise on the shelf than is absolutely necessary are always crucial to maintaining positive cash flows.
Net Current Assets and Liquidity
Of all the entries in the balance sheet, this is by far the most important. Net current assets represent the working capital of a business, which broadly defines its liquidity.
If your Figurewizard balance sheet forecast shows a deficit for working capital, you must revisit your planned figures, either to eliminate the deficit by reducing overheads cutting down on investment, improving margins and either adding new capital or long-term debt. A forecast working capital deficit cannot simply be ignored.
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Why is it that fixed assets seem to get a bad press in figurewizard? I can see why they don't have anything to do with liquidity but they do have a value in which case they can act as collateral if new money from a temporary loan is needed.
There are a lot of reasons why fixed assets are not considered to be good collateral; the first being liquidity. Cash flow arises from liquidity and fixed assets don't generate any of it; ever.
The second consideration is that fixed assets which are presumed to be essential to a company's trading are seen as being items whose removal would therefore be detrimental to a company's trading activity. Finally and most tellingly, assets such as plant and equipment, furniture and fixtures and fittings almost always represent a fraction of their net book value in the event of a forced sale.