Doing A Balance Sheet Analysis

What does the financial status of your company look like? Are you in debt? Are you struggling with marketing efforts and making ends meet? If you are not sure of the financial status of your company it is time for you to do a balance sheet analysis. The balance sheet will help you to understand that finances of your business and to see if you are dealing with some serious issues that need to be addressed.

A balance sheet that is kept in order will assist you in sales forecasting and can help you to understand the financial status for your marketing needs. The balance sheet should include information about not only the money you make but other things as well like the assets that you have and the liabilities that your company has. When a company has investors, the balance sheet must be properly maintained as the investors will review it to help them see if the company is making money or if it is time to move on from the company.

Take a look at the annual report of other companies to get an idea of what a proper balance sheet will look like. The annual reports can help you to see that there are certain elements that need to be taken care of and looking over another companies sheet helps you to see what things investors often deem important.

To do your balance sheet analysis you need to make a list of all the companies' assets. The assets are the property pieces that your company actually owns. This is often the real estate or the equipment that you have. Assets are also the money accounts that your organization has to rely on to sustain itself.

List all of the liabilities that your organization has. You will have liabilities that come down to things such as vendor accounts you need to pay along with credit cards. All the accounts that you owe money to are considered a liability.

Next your balance sheet will have a section for the return over assets. What this refers to is the amount of money you have based on the assets minus liabilities.

List out how much money you expect to pay toward things like your assets. This will be listed as the return over assets. In this section you need to list your interest rate to show investors that you are owing money in the future and how much money it will add up to be.

To see if you can qualify for future loans and other things your company should also list out what the credit rating is for your organization. Your company's credit rating will make a big difference in the ability to get a loan and to show investors that your company is financially smart with money. Keep your credit rating higher by paying back your lenders in a timely manner. You can also keep it higher by keeping your debt ratio low.

How often should you do a balance sheet analysis? If you maintain your accounts, you should be able to see a snapshot of the accounts often. If you do not maintain the accounts, it is advisable to do a balance sheet analysis at least 4 times a year. This is the best option you have as it will be able to give you an idea of where your accounts are at and if you need to be able to focus your efforts on marketing so that you can get more money to pay off debts and other things and can make it easier for investors to provide you with funding.