Financial Performance Evaluation
Your understanding of the financial statement helps when computing financial metrics. For instance, when we calculate the return on assets, we know that we take the after-tax operating income from the income statement. We retrieve the average total assets from the balance sheet. Below, I am providing a brief balance sheet. Assets = Liabilities + Owner’s EquityASSETSCurrent Assets Cash Accounts Receivables Inventory Prepaid ExpensesLong-Term Assets Land Building Machinery EquipmentLIABILITIESCurrent Liabilities Accounts Payable Wages and Salaries Payable Taxes Payable Interest PayableLong-Term Liabilities Notes Payable Bonds PayableOWNERS’ EQUITYBeginning BalanceNet IncomeEnding BalanceHow is the information in the brief balance sheet related to what you already know?