1. Financial Statements – Balance Sheet
3.5 Assessing competitiveness

2. b) Statement of financial position (balance sheet)
What you need to know
b) Statement of financial position (balance sheet)
key information
stakeholder interest

3. Income Statement & Financial Accounts
This measures the business' performance (income & costs) over a given period of time, usually one year
Balance sheet
A snapshot of the business' assets (what it owns or is owed) and its liabilities (what it owes) on a particular day
Cash flow statement
Shows how the business has generated and disposed of cash and liquid funds during a specific period

4. The Balance Sheet
This is a snapshot of the business' assets (what it owns or is owed) and its liabilities (what it owes) on a particular day - usually the last day of a financial period

5. The Two Sides of the Balance Sheet
Non-Current Assets
Share Capital + +
Current Assets
Reserves (Profit) -
Current Liabilities -
Non- Current Liabilities
NET ASSETS
CAPITAL & RESERVES

6. Non- Current Liabilities
Non-Current Assets
Non-Current Assets
Land & Buildings +
Current Assets -
Plant & Machinery
Current Liabilities -
Non- Current Liabilities
Goodwill
NET ASSETS

7. Trade Debtors (Receivables) Non- Current Liabilities
Current Assets
Non-Current Assets
Cash Balances +
Current Assets -
Trade Debtors (Receivables)
Current Liabilities -
Non- Current Liabilities
Inventories (Stocks)
NET ASSETS

8. Current Liabilities + - - Non-Current Assets
Trade Creditors (Payables) +
Current Assets -
Short-term Borrowings
Current Liabilities -
Non- Current Liabilities
Accruals & Provisions
NET ASSETS

9. Other Long-term Liabilities Non- Current Liabilities
Non-Current Assets
Long-term Borrowings +
Current Assets -
Other Long-term Liabilities
Current Liabilities -
Non- Current Liabilities
NET ASSETS

10. Who is Interested in the Balance Sheet?
Creditors
What is the liquidity position of the business?
Is the business able to pay its debts as they fall due?
Banks & other lenders
How much debt does the business have (gearing)?
Is it able to finance its debt
What cash and other liquid balances does it have?
Employees
Is the business solvent?
Does the business have a suitably strong liquidity position?