# Financial Management – Balance Sheet

```Financial Management – Balance Sheet
Předmět
Tematick&aacute; oblast
Autor
Škola
Anglick&yacute; jazyk
Odborn&aacute; angličtina - obchodn&iacute;, ekonomick&aacute; a ICT
Ing. Stanislav Kindl, MBA
Hotelov&aacute; škola, Obchodn&iacute; akademie a Středn&iacute; průmyslov&aacute; škola, Teplice,
Benešovo n&aacute;měst&iacute; 1, př&iacute;spěvkov&aacute; organizace
K&oacute;d VY_32_INOVACE_JAA_848
Datum 21.01.2013
Zad&aacute;n&iacute;: Pracujte s textem a připraven&yacute;mi &uacute;koly či ot&aacute;zkami. Podtrhněte si nezn&aacute;m&eacute; pojmy.
Financial Management Course III
1
Financial Management III – Financial Statements, Balance Sheet
TASK 1 – Can you remember all financial statements? List them again.
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Take a look at the picture, please. Do you understand all the processes? Will you be
able to describe all four stages including an example?
Financial Management Course III
2
Study slides 9 -15 and give details about the elements of balance sheet.
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Put down the key equation.
Do you really understand all three areas? The following exercise will explore the left
side of the balance sheet in detail. Let’s see what it takes to work with assets.
Financial Management Course III
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TASK 3 – Balance Sheet : ASSETS
Find the right definition for (A) Current Assets and (B) Fixed [Long-Term] Assets.
CA (Current Assets)
FA (Fixed Assets)
1. 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. Buildings, real estate, equipment and furniture are good examples of fixed
assets.
3. A long-term tangible piece of property that a firm owns and uses in the
production of its income and is not expected to be consumed or converted into
cash any sooner than at least one year's time. Fixed assets are sometimes
collectively referred to as &quot;plant&quot;.
4. 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 &quot;current accounts&quot;.
5. 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.
6. Generally, intangible long-term assets such as trademarks and patents are not
categorized as fixed assets but are more specifically referred to as &quot;fixed
intangible assets&quot;.
7. 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.
Financial Management Course III
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Have a look at the balance sheet below. What contains this financial statements
beyond the consideration of the key elements? And what belongs under Current
Assets &amp; Fixed Assets?
Financial Management Course III
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TASK 4 – Balance Sheet : ASSETS Evaluation
Find any balance sheet of your choice and preference of an existing company. GAAP
is required for now. Give details to the asset structure.
TASK 5 – Balance Sheet : Liquidity of ASSETS
Use Wikipedia for additional reading. In particular, the Liquid Assets chapter is highly
recommended : http://en.wikipedia.org/wiki/Asset . Is there any link between the
liquidity of assets and the chronology of assets within the balance sheet?
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