Join Rudolph Rosenberg for an in-depth discussion in this video A balance sheet must be in balance, part of Financial Literacy: Reading Financial Reports.
- [Voiceover] If you ever wondered where the name…balance sheet comes from,…the explanation is coming from the fact that…the two key sections of the balance sheet,…assets and liabilities and equity…must always be equal to each other,…or in other words, be in balance.…If that is true it means that all the assets,…or everything the company owns must be…equal to the total amount of what it owes.…The reason for that is that the company in itself…being a dridigal person and not a physical person…cannot ultimately own anything for itself.…
It therefore does owe whatever it owns to someone else.…First, he owes money to lenders.…As it has received cash from banks and other lenders,…a portion of what the company owns belongs to them.…At least until the loans have been repaid.…If there's anything left it is owed to the shareholders,…the true owners of the company and at it's value.…There's a formula that summaries this well and it is…assets is equal to liabilities plus equity.…
Another way to look at it is to say that if the…
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- What is a financial statement?
- Reading the balance sheet
- Understanding depreciation, liabilities, and equity
- Reading the income statement
- Understanding revenue, costs, profitability, and net income
- How cash flow works
- Analyzing financial documents with context<br><br>
- The PMI Registered Education Provider logo is a registered mark of the Project Management Institute, Inc.
Skill Level Appropriate for all
1. Financial Statements
2. The Balance Sheet
3. The Income Statement
4. The Cash Flow Statement
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