BALANCE SHEET STATEMENT DESCRIPTIONS (PROVIDED BY SL CAPEX)
ASSETS
A balance sheet account that represents the value of all assets that are reasonably expected to be converted into cash within one year in the normal course of business. Current assets include cash, accounts receivable, inventory, marketable securities, prepaid expenses and other liquid assets that can be readily converted to cash. 2. In personal finance, current assets are all assets that a person can readily convert to cash to pay outstanding debts and cover liabilities without having to sell fixed assets. In the United Kingdom, current assets are also known as "current accounts".
CURRENT ASSETS
1. Current assets are important to businesses because they are the assets that are used to fund day-to-day operations and pay ongoing expenses. Depending on the nature of the business, current assets can range from barrels of crude oil, to baked goods, to foreign currency.
2. In personal finance, current assets include cash on hand and in the bank,
and marketable securities that are not tied up in long-term investments. In
other words, current assets are anything of value that is highly liquid.
CASH AND CASH EQUIVALENTS
An item on the balance sheet that reports the value of a company's assets that
are cash or can be converted into cash immediately. Examples of cash and equivalents
are bank accounts, marketable securities and Treasury bills.
SHORT TERM INVESTMENTS
An account in the current assets section of a company's balance sheet. This account contains any investments that a company has made that will expire within one year. For the most part, these accounts contain stocks and bonds that can be liquidated fairly quickly. Most companies in a strong cash position have a short-term investments account on the balance sheet. This means that a company can afford to invest excess cash in stocks and bonds to earn higher interest than what would be earned from a normal savings account. securities that can be converted into cash quickly at a reasonable price.
Marketable securities are very liquid as they tend to have maturities of less than one year. Furthermore, the rate at which these securities can be bought or sold has little effect on their prices.
NET RECEIVABLES
Money owed by customers (individuals or corporations) to another entity in exchange for goods or services that have been delivered or used, but not yet paid for. Receivables usually come in the form of operating lines of credit and are usually due within a relatively short time period, ranging from a few days to a year. On a public company's balance sheet, accounts receivable is often recorded as an asset because this represents a legal obligation for the customer to remit cash for its short-term debts
If a company has receivables, this means it has made a sale but has yet to collect the money from the purchaser. Most companies operate by allowing some portion of their sales to be on credit. These type of sales are usually made to frequent or special customers who are invoiced periodically, and allows them to avoid the hassle of physically making payments as each transaction occurs. In other words, this is when a customer gives a company an IOU for goods or services already received or rendered.
Accounts receivable are not limited to businesses - individuals have them as well. People get receivables from their employers in the form of a monthly or bi-weekly paycheck. They are legally owed this money for services (work) already provided. When a company owes debts to its suppliers or other parties, these are known as accounts payable.
INVENTORY
The raw materials, work-in-process goods and completely finished goods that are considered to be the portion of a business's assets that are ready or will be ready for selling. Inventory represents one of the most important assets that most businesses possess, because the turnover of inventory represents one of the primary sources of revenue generation and subsequent earnings for the companies' shareholders/owners.
Possessing a high amount of inventory for long periods of time is not usually
good for a business, because there are inventory storage, obsolescence and spoilage
costs. However, possessing not enough inventory isn't good either, because the
business runs the risk of losing out on potential sales and potential market
share as well. Inventory management forecasts and strategies, such as a just-in-time
inventory system, can help minimize inventory costs because goods are created
or received as inventory only when needed.
LONG TERM INVESTMENTS
An account on the asset side of a company's balance sheet that represents the
investments that a company intends to hold for more than a year. They may include
stocks, bonds, real estate and cash. The long-term investments account differs
largely from the short-term investments account in that the short-term investments
will most likely be sold, whereas the long-term investments may never be sold.
A common form of this type of investing occurs when company A invests largely
in company B and gains significant influence over company B without having a
majority of the voting shares. In this case, the purchase price would be shown
as a long-term investment.
PROPERTY PLANT AND EQUIPMENT
A type of asset a company owns that is vital to business operations but cannot be easily liquidated. The value of property, plant and equipment is typically depreciated over the estimated life of the assets, because even the longest-term assets become obsolete or useless after a period of time. Depending on the nature of a company's business, the total value of PP&E can range from very low to extremely high compared to total assets. International accounting standard 16 deals with the accounting treatment of PP&E. An example of a business with a high amounts of PP&E would be an shipping company, because most of its assets would be tied into its fleet of ships and administrative buildings.
On the other hand, a management consulting firm would have far lower amounts
of PP&E, because a consultant would only need a computer and an office in
a building to run its operations. This item is listed separately in most financial
statements because PP&E is treated differently in accounting statements
since improvements, replacements and betterments can pose accounting issues
depending on how the costs are recorded.
GOODWILL (NET INTANGIBLES)
An account that can be found in the assets portion of a company's balance sheet.
Goodwill can often arise when one company is purchased by another company. In
an acquisition, the amount paid for the company over book value usually accounts
for the target firm's intangible assets. Goodwill is seen as an intangible asset
on the balance sheet because it is not a physical asset such as buildings and
equipment. Goodwill typically reflects the value of intangible assets such as
a strong brand name, good customer relations, good employee relations and any
patents or proprietary technology.
CURRENT LIABILITIES
A company's debts or obligations that are due within one year. Current liabilities
appear on the company's balance sheet and include short term debt, accounts
payable, accrued liabilities and other debts. Essentially, these are bills that
are due to creditors and suppliers within a short period of time. Normally,
companies withdraw or cash current assets in order to pay their current liabilities.
Analysts and creditors will often use the current ratio, (which divides current
assets by liabilities), or the quick ratio, (which divides current assets minus
inventories by current liabilities), to determine whether a company has the
ability to pay off its current liabilities.
ACCOUNTS PAYABLE
An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable entry is found on a balance sheet under the heading current liabilities. Accounts payable are often referred to as "payables". Another common usage of AP refers to a business department or division that is responsible for making payments owed by the company to suppliers and other creditors. Accounts payable are debts that must be paid off within a given period of time in order to avoid default. For example, at the corporate level, AP refers to short-term debt payments to suppliers and banks.
Payables are not limited to corporations. At the household level, people are
also subject to bill payment for goods or services provided to them by creditors.
For example, the phone company, the gas company and the cable company are types
of creditors. Each one of these creditors provide a service first and then bills
the customer after the fact. The payable is essentially a short-term IOU from
a customer to the creditor. Each demands payment for goods or services rendered
and must be paid accordingly. If people or companies don't pay their bills,
they are considered to be in default.
OTHER CURRENT LIABILITIES
A balance sheet entry used by companies to group together current liabilities that are not assigned to common liabilities such as debt obligations or accounts payable. Companies will group together these other current liabilities into one account on the balance sheet for the sake of simplicity. Investors should be able to find out exactly which liabilities are accounted for in the other current liabilities account by reading the attached foot or end notes.
LONG TERM DEBT
Recorded on the balance sheet, a company's liabilities for leases, bond repayments
and other items due in more than one year. A company's long-term liabilities
are accounted for by its debt obligations to other parties which last longer
than one year.
OTHER LIABILITIES
A balance sheet item that includes obligations that do not currently require
interest payments. This would include items such as remaining leases, future
employee benefits and deferred taxes
DEFERRED LONG TERM LIABILITY CHARGES
A collection of future company liabilities that will typically be summed up
and shown as one line item on the balance sheet. The charges are most often
made up of deferred-tax liabilities that are to be paid more than one year in
the future; depending on the company, they can also be comprised of forward
contract obligations (like, swap contracts or derivative products). To get clarity
on these charges, read the attached footnotes or other comments that appear
on the official earnings statements as filed with the SEC. This figure should
stay relatively constant from year to year; and, as such, investors should be
wary if this figure is rising significantly.
MINORITY INTEREST
Minority Interest A significant but non-controlling ownership of less than 50% of a company's voting shares by either an investor or another company. Also, a minority interest account is a non-current liability that can be found on a parent company's balance sheet that represents the proportion of its subsidiaries owned by minority shareholders. In accounting terms, if a company owns a minority interest in another company but only has a minority passive position (i.e. it is unable to exert influence), then all that is recorded from this investment are the dividends received from the minority interest.
If the company has a minority active position (i.e. it is able to exert influence),
then both dividends and a percent of income are recorded on the company's books.
As for the minority interest account, an example would be if ABC Corp owns 90%
of XYZ inc, which is a $100 million company. On ABC Corp's balance sheet, there
would be a $10 million liability in minority interest account to represent the
10% of XYZ inc. that ABC Corp does not own.
NEGATIVE GOODWILL
A gain occurring when the price paid for an acquisition is less than the fair
value of its net assets. Depending on the circumstances, this is listed as a
separate line item and usually recognized as income. Negative goodwill can sometimes
occur after a distressed sale. Because this type of sale almost always happens
under unfavorable conditions, the seller generally receives a worse price. When
the price received is less than the actual value of its net assets you have
negative goodwill.
STOCKHOLDERS' EQUITY
A firm's total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity represents the amount by which a company is financed through common and preferred shares. Also known as "share capital", "net worth" or "stockholders' equity". Shareholders' equity comes from two main sources. The first and original source is the money that was originally invested in the company, along with any additional investments made thereafter. The second comes from retained earnings which the company is able to accumulate over time through its operations. In most cases, the retained earnings portion is the largest component.