1. Understanding a Financial Statement
Horticulture 2
Essential Standard 2.02

2. A. Total assets = current assets + non-current assets.
1. Current assets- items that can quickly be converted to cash or that will be sold within 12 months. Examples- cash on hand, checking and savings accounts, stocks, bonds and cash in value of life insurance money others owe you, current non-depreciable inventory.
2. Non-current assets- items that have a useful life of more than one year and are used in the business. Examples- non-current, non-depreciable inventory, land.

3. B. Total liabilities = current liabilities (debts) + non-current
B. Total liabilities = current liabilities (debts) + non-current liabilities (debts).
1. Current liabilities- accounts and notes payable, this year’s part of non-current liabilities.
Non-current liabilities- mortgages and other debts not
due this year.

4. C. Net worth or owner’s equity =
total assets minus total liabilities.

5. D. Debt-to-Equity Ratio- a measure of a company or individuals net worth compared to the liabilities.
Provides an indicator of the debt and equity a company is using to finance assets.
Formula used to calculate Debt-to-Equity Ratio is
Debt-to-Equity Ratio = total liabilities/net worth.

6. E. Value- monetary worth.

7. F. Inventory- an itemized list of things owned by a business with the beginning value and depreciated value.
Non-depreciable- items that will be used up or sold
within a year.
Example: feed, supplies, etc.
2. Depreciable- items that have a useful life of more than one year and lose value because of age, wear or becoming out-of-date because of technology advancements.
3. Land is NOT depreciable property.

8. RECORDS WORKSHEET
Instructions: State whether each item is a current liability, non-current liability, current asset, or non- current asset. Give the value of that item and then calculate the total value. Once you have all the values, calculate total assets, total liabilities, and net worth.

9. Item Asset or Liability
Current/Non- current
Asset or Liability
Value
Total Value
Electric bill
$278/month
Dodge Viper car
payment
$660/month
26 acres of land
valued at
$7,000/acre
Tax appraised
value of home:
$450,000
Thoroughbred
racehorse value:
$600,000
IRA: $25,000
Personal Trainer:
$350/month
Water Bill:
$80/month
German
Shepherd: $1,000
Cell phone bill:
$120/month

10. Non-current Liabilities= Total Assets= Total Liabilities= Net Worth=
Mortgage
payment:
$854/month
Mortgage payoff:
$230,000
Horse boarding
bill: $550/month
Pet Groomer:
$30/month
Cable bill:
$80/month
Value of Dodge
Viper: $67,000
Checking Account
Balance: $3,456
Savings Account: $6
Balance Sheet
Current Assets=
Current Liabilities=
Non-current Assets=
Non-current Liabilities=
Total Assets=
Total Liabilities=
Net Worth=

11. Let’s Check Our Work!!!

12. Item Asset or Liability
Current/Non- current
Asset or Liability
Value
Total Value
Electric bill
$278/month
Current liability
278/month
336/yr.
Dodge Viper car
payment
$660/month
660/month
7920/yr.
26 acres of land
valued at
$7,000/acre
Non-current asset
7,000/acre
182,000
Tax appraised value of home:
$450,000
450,000
Thoroughbred
racehorse value:
$600,000
6000,000
600,000
IRA: $25,000
25,000
Personal Trainer:
$350/month
350/month
4,2000/yr.
Water Bill:
$80/month
80/month
960/yr.
German
Shepherd: $1,000
1,000
Cell phone bill:
$120/month
120/month
1440/yr.

13. Current Liabilities= $36,024 Non-current Assets= $1,325,000
Mortgage
payment:
$854/month
Current liability
854/mo.
10,248/yr.
Mortgage payoff:
$230,000
Non-current liability
230,000
Horse boarding
bill: $550/month
550/month
6,600/yr.
Pet Groomer:
$30/month
30/month
360/yr.
Cable bill:
$80/month
80/month
960/yr.
Value of Dodge
Viper: $67,000
Non-current asset
67,000
Checking Account
Balance: $3,456
Current asset
3,456
Savings Account: $6 6
Balance Sheet
Current Assets= $3462
Current Liabilities= $36,024
Non-current Assets=
$1,325,000
Non-current Liabilities= $230,000
Total Assets= $1,328,462
Total Liabilities=$266,024
Net Worth= $1,062,438