Updated July 14, 2023
Definition of Balance Sheet Examples
The balance sheet is a key statement that forms a part of the financial statements, which reports the financial position or the book value of the company’s net worth at a specified date in the current year as well as the previous year. It may be presented for a standalone entity or the group- companies on a consolidated basis.
In this topic, we will look at the different balance sheet examples.
Explanation
- The basic formula for the balance sheet is Assets less liabilities equals equity. A company can generate production capacity and run the business using the assets. The credit transactions with suppliers are reflected on the liabilities side. Equity represents the stake of owners in the company.
- Assets must equal liabilities plus equity. The balance sheet explains how the assets are financed, i.e., via debt or equity.
- The assets side is subdivided into current assets and non-current assets. Similarly, liabilities are subdivided into current liabilities and non-current liabilities. Current asset/liability is due to/ due from within one accounting cycle. Non-current asset/liability is expected to / be due from beyond one accounting cycle.
- Few concepts of a balance sheet as explained in short as follows:
| Particulars | Explanation |
| Inventory | This is an asset account for the movement of goods for production. At the end of the year, inventory has values for raw materials, progress, and finished goods. |
| Property, plant & equipment (PPE) | These are depreciable tangible fixed assets of the entity. Depreciation cost (except on land, which is non-depreciable) is recognized in the income statement. |
| Intangible assets | These are intangible fixed assets of the entity. Intangible assets include patents, trademarks, copyrights, etc. |
| Account receivables (AR) | This asset account tracks the customers to whom the goods are being sold on credit. This account is net of “provision for doubtful debts”. |
| Cash & Cash equivalents | This asset account includes the cash in hand, bank balance, and short-term deposits, with the bank having maturities within three months from the year’s close. |
| Other Current Assets | This may include the advances paid to employees. Tax refundable from the government. |
| Accounts payable (AP) | This liability account reflects the amounts payable to the suppliers from raw material and trading stocks on a credit basis. |
| Current Debt / Short-term debt | This is a debt due within a one-year time frame from the close of the accounting year. |
| Current portion of long-term debt | The long-term is payable in many years. Some part of it is payable in the current year as well. Thus, accounting conventions suggest showing the debt’s current portion separately. |
| Long-term debt | This is debt taken for a long-term period (beyond a one-year cycle). This amount reflects beyond one year from the closing date. |
| Retained earnings | This account reflects the earnings earned to date from the company’s business operations. |
| Reserves | The company may keep some reserves earmarked for a specific purpose, either voluntarily or due to the requirement of any law for the time being in force. |
| Share Capital | This reflects the amount contributed by the owners of the company. When the company winds up, the shareholders are the last person to receive their money. They take all the risks of running the business. |
| Additional Paid-in capital | This account reflects the excess money paid by the shareholders over and above the face value of the shares. |
| Treasury Stock | This is stock held by the company in its own hands. US GAAP requires it to be shown at cost at all times. |
Examples of Balance Sheet
Below are the different balance sheet examples;
General Note: We are taking four examples/templates here. We will cover the explanation for each template on different aspects & analysis to avoid similar & repetitive explanations.
Example #1
Company A Inc
| Particulars | As of December 31, | |
| 2019 ($) | 2018 ($) | |
| Assets | ||
| Current assets | ||
| Cash and cash equivalents | 16,602 | 18,430 |
| Marketable securities | 8,456 | 4,560 |
| Inventories | 18,790 | 15,623 |
| Trade receivables(net) and other receivables | 9,059 | 7,960 |
| Total current assets (A) | 52,907 | 46,573 |
| Non-current assets | ||
| Property, plant, and equipment (net) | 25,463 | 23,248 |
| Intangible assets | 16,486 | 13,450 |
| Deferred income tax assets | 4,890 | 4,560 |
| Trade and other receivables | 1,862 | 2,356 |
| Total non-current assets (B) | 48,701 | 43,614 |
| Total Assets (A+B) | 1,01,608 | 90,187 |
| Liabilities and Stockholder’s Equity | ||
| Current liabilities | ||
| Trade payables | 32,620 | 26,325 |
| Current income tax liabilities | 16,791 | 12,459 |
| Current portion of long-term borrowings | 1,365 | 1,203 |
| Provisions for other liabilities and charges | 1,850 | 905 |
| Unearned revenue | 8,620 | 4,890 |
| Total current liabilities (D) | 61,246 | 45,782 |
| Non-current liabilities | ||
| Non-current portion of long-term borrowings | 12,432 | 13,797 |
| Other long-term liabilities | 1,205 | 984 |
| Provisions for other liabilities | 1,623 | 1,289 |
| Total non-current liabilities | 15,260 | 16,070 |
| Stockholders’ Equity | ||
| Preferred Stock | 1,000 | 1,000 |
| Common stock | 15,000 | 15,000 |
| Treasury Stock at cost | -1,523 | -1,523 |
| Additional Paid-in capital | 5,623 | 4,562 |
| Retained earnings | 5,002 | 9,296 |
| Total Stockholders’ Equity | 25,102 | 28,335 |
| Total Liabilities and Stockholder’s Equity | 1,01,608 | 90,187 |
Explanation
- The first column relates to the current year & the second column for last year is given for comparison purposes. The accounting policies for both years should be consistent so that the users can understand the deviations compared to last year.
- The inventory has increased by 20% from 15,623 in the previous year. This represents higher raw materials (to be used for production capacity in the year 2020) or higher finished goods stock as of December 31, 2019. If the increase is due to higher finished goods, it represents that the company earned well revenue in 2020.
Example #2
Company B Inc
| Particulars | As of December 31, | |
| 2019 ($) | 2018 ($) | |
| Assets | ||
| Current assets | ||
| Cash and cash equivalents | 18,670 | 20,726 |
| Marketable securities | 9,509 | 5,128 |
| Inventories | 21,130 | 17,569 |
| Trade receivables(net) and other receivables | 10,187 | 8,951 |
| Total current assets (A) | 59,496 | 52,374 |
| Non-current assets | ||
| Property, plant, and equipment (net) | 28,635 | 26,144 |
| Intangible assets | 18,539 | 15,125 |
| Deferred income tax assets | 5,499 | 5,128 |
| Trade and other receivables | 2,094 | 2,649 |
| Total non-current assets (B) | 54,767 | 49,046 |
| Total Assets (A+B) | 1,14,263 | 1,01,420 |
| Liabilities and Stockholder’s Equity | ||
| Current liabilities | ||
| Trade payables | 36,683 | 29,604 |
| Current income tax liabilities | 18,882 | 14,011 |
| Current portion of long-term borrowings | 1,535 | 1,353 |
| Provisions for other liabilities and charges | 2,080 | 1,018 |
| Unearned revenue | 9,694 | 5,499 |
| Total current liabilities (D) | 68,874 | 51,485 |
| Non-current liabilities | ||
| Non-current portion of long-term borrowings | 13,981 | 15,516 |
| Other long-term liabilities | 1,355 | 1,107 |
| Provisions for other liabilities | 1,825 | 1,450 |
| Total non-current liabilities | 17,161 | 18,073 |
| Stockholders’ Equity | ||
| Preferred Stock | 1,125 | 1,125 |
| Common stock | 16,868 | 16,868 |
| Treasury Stock at cost | -1,713 | -1,713 |
| Additional Paid capital | 6,323 | 5,130 |
| Retained earnings | 5,625 | 10,452 |
| Total Stockholders’ Equity | 28,228 | 31,862 |
| Total Liabilities and Stockholder’s Equity | 1,14,263 | 1,01,420 |
Explanation
- Each line item is the total of different accounts. Like, in the case of the “inventory”, the figure of $ 21,130 million has raw materials, work in progress, goods in transit & finished goods. In the case of “Provision for other current liabilities”, $ 2080 million has provision for expenses, employee dues payable, deposits, etc. All such details are enlisted in the notes to accounts accompanying the balance sheet.
- Treasury stock is the equity stock held by the company. It has to be shown at cost.
Example #3
Company C Inc
| Particulars | As of December 31, | |
| 2019 ($) | 2018 ($) | |
| Assets | ||
| Current Assets | ||
| Cash and cash equivalents | 20,996 | 23,308 |
| Marketable securities | 10,693 | 5,767 |
| Inventories | 23,762 | 19,757 |
| Trade receivables(net) and other receivables | 11,456 | 10,066 |
| Total current assets (A) | 66,907 | 58,898 |
| Non-Current Assets | ||
| Property, plant, and equipment (net) | 32,202 | 29,400 |
| Intangible assets | 20,848 | 17,009 |
| Deferred income tax assets | 6,184 | 5,767 |
| Trade and other receivables | 2,355 | 2,979 |
| Total Non-Current Assets (B) | 61,589 | 55,155 |
| Total Assets (A+B) | 1,28,496 | 1,14,053 |
| Liabilities and Stockholder’s Equity | ||
| Current Liabilities | ||
| Trade payables | 41,252 | 33,291 |
| Current income tax liabilities | 21,234 | 15,756 |
| Current portion of long-term borrowings | 1,726 | 1,522 |
| Provisions for other liabilities and charges | 2,339 | 1,145 |
| Unearned revenue | 10,901 | 6,184 |
| Total Current Liabilities (D) | 77,452 | 57,898 |
| Non-Current Liabilities | ||
| Non-current portion of long-term borrowings | 15,722 | 17,449 |
| Other long-term liabilities | 1,524 | 1,245 |
| Provisions for other liabilities | 2,052 | 1,631 |
| Total Non-Current Liabilities | 19,298 | 20,325 |
| Stockholders’ Equity | ||
| Preferred Stock | 1,265 | 1,265 |
| Common stock | 18,969 | 18,969 |
| Treasury Stock at cost | -1,926 | -1,926 |
| Additional Paid capital | 7,111 | 5,769 |
| Retained earnings | 6,327 | 11,753 |
| Total Stockholders’ Equity | 31,746 | 35,830 |
| Total Liabilities and Stockholder’s Equity | 1,28,496 | 1,14,053 |
Explanation
- The current ratio of the company is as follows:
| Current Ratio | 2019($) | 2018($) |
| Total current assets (A) | 66,907 | 58,898 |
| Total current liabilities (B) | 77,452 | 57,898 |
| Current ratio (A/B) | 0.86 | 1.02 |
The current ratio means the amount of “resources” you must pay $ 1$ for current liability. As you can see, the ratio has decreased from 1.02 to 0.86, a sign of lower liquidity in the business. The company needs to either increase the current assets or decrease the current liabilities to match the industry minimum standard of 1 for the current ratio.
- The quick ratio of the company is as follows:
| Quick Ratio | 2019 ($) | 2018 ($) |
| Cash and cash equivalents | 20,996 | 23,308 |
| Marketable securities | 10,693 | 5,767 |
| Subtotal (A) | 31,689 | 29,075 |
| Total current liabilities (B) | 77,452 | 57,898 |
| Quick ratio (A/B) | 0.41 | 0.50 |
Quick ratio means the amount of “money” you have to pay 1$ for current liabilities now. It analyses whether the company could pay if all the current liabilities are crystalized today itself. The reduction in ratio signifies the lower liquidity of the company. This ratio thus confirms the interpretation of the current ratio.
Example #4
Company D Inc
| Particulars | As of December 31, | |
| 2019 ($) | 2018 ($) | |
| Assets | ||
| Current Assets | ||
| Cash and cash equivalents | 20,996 | 23,308 |
| Marketable securities | 10,693 | 5,767 |
| Inventories | 23,762 | 19,757 |
| Trade receivables(net) and other receivables | 11,456 | 10,066 |
| Total Current Assets (A) | 66,907 | 58,898 |
| Non-Current Assets | ||
| Property, plant, and equipment (net) | 32,202 | 29,400 |
| Intangible assets | 20,848 | 17,009 |
| Trade and other receivables | 2,355 | 2,979 |
| Total non-current assets (B) | 55,405 | 49,388 |
| Total Assets (A+B) | 1,22,312 | 1,08,286 |
| Liabilities and Stockholder’s Equity | ||
| Current Liabilities | ||
| Trade payables | 41,252 | 33,291 |
| Current income tax liabilities | 21,234 | 15,756 |
| Current portion of long-term borrowings | 1,726 | 1,522 |
| Total Current Liabilities (D) | 64,212 | 50,569 |
| Non-Current Liabilities | ||
| Non-current portion of long-term borrowings | 15,722 | 17,449 |
| Provisions for other liabilities | 2,052 | 1,631 |
| Total Non-Current Liabilities | 17,774 | 19,080 |
| Stockholders’ Equity | ||
| Preferred Stock | 1,265 | 1,265 |
| Common stock | 24,969 | 19,769 |
| Additional Paid capital | 7,111 | 5,769 |
| Retained earnings | 6,981 | 11,834 |
| Total Stockholders’ Equity | 40,326 | 38,637 |
| Total Liabilities and Stockholder’s Equity | 1,22,312 | 1,08,286 |
Explanation
- Let’s have the following figure of template 4 for discussion purposes:
| Following for analysis | 2019 ($) | 2018 ($) | Difference | Deviation |
| Common stock | 24,969 | 19,769 | 5,200 | 26% |
| Additional Paid capital | 7,111 | 5,769 | 1,342 | 23% |
| Retained earnings | 6,981 | 11,834 | -4,853 | -41% |
- The 26% increase in common stock represents an issue of fresh capital during the year. The infusion of fresh capital is a positive sign for stakeholders. This increase is further supported by a 23% increase in additional paid-in capital, representing the new stocks issued at a premium over face value.
- The 41% decrease in retained earnings shows a pay-out of dividends, lower profits, or lower company business than the current year. This reduction in business further supports our two interpretations about the increase in share capital & additional paid-in capital.
Like the balance sheet, there are other parts of financial statements, namely, income and cash flow statements. These three are called “Financial Statements”, which the stakeholders use for specific purposes. The balance sheet only shows the financial position today compared to the same date last year. Still, it does not show the breakup of profits earned during the year, nor the cash revenues from different activities of the organization. Hence, the balance sheet analysis is incomplete when it did in isolation from the other statements.
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This is a guide to Balance Sheet Examples. Here we also discuss the introduction and concepts of the balance sheet, along with examples. You may also have a look at the following articles to learn more –
