|
Assets, Liabilities
and Shareholder Equity
Every
balance sheet is divided into three main parts - assets, liabilities, and
shareholder equity.
-
Assets are anything that have value. Your house,
car, checking account, and the antique china set your grandma gave you are all
assets. Companies figure up the dollar value of everything they own and
put it under the asset side of the balance sheet.
-
Liabilities are the
opposite of assets. They are anything that costs a company money. Liabilities include monthly
rent payments, utility bills, the mortgage on the building, corporate credit
card debt, and any bonds the company
has issued.
-
Shareholder equity is the difference between assets and liability; it tells
you the "book value", or what is left for the stockholders after all the debt
has been paid.
Every
balance sheet must "balance". The total value of all assets must be
equal to the combined value of the all liabilities and shareholder equity (i.e.,
if a lemonade stand had $10 in assets and $3 in liabilities, the shareholder
equity would be $7. The assets are $10, the liabilities + shareholder
equity = $10 [$3 + $7]).
What Does a Balance Sheet Look Like?
Below is an example
of what a typical balance sheet looks like.
|
Coca-Cola Company
Consolidated Balance Sheet -
January 31, 2001 |
| Assets |
|
|
| Current Assets |
Dec. 31, 2000 |
Dec. 31, 1999 |
| Cash and
Cash Equivalents |
$1,819,000,000 |
$1,611,000,000 |
| Short Term
Investments |
$73,000,000 |
$201,000,000 |
| Receivables |
$1,757,000,000 |
$1,798,000,000 |
| Inventories |
$1,066,000,000 |
$1,076,000,000 |
| Prepaid
expenses and other |
$1,905,000,000 |
$1,794,000,000 |
| Total
Current Assets |
$6,620,000,000 |
$6,480,000,000 |
| |
|
|
| Long Term Assets |
|
|
| Long Term
Investments |
$8,129,000,000 |
$8,916,000,000 |
| Property,
Plant and Equipment |
$4,168,000,000 |
$4,267,000,000 |
| Goodwill |
$1,917,000,000 |
$1,960,000,000 |
| Intangible
Assets |
N/A |
N/A |
| Accumulated
Depreciation (or Amortization) |
N/A |
N/A |
| Other
Assets |
N/A |
N/A |
| Deferred
Long Term Asset Charges |
N/A |
N/A |
| Total
Assets |
$20,834,000,000 |
$21,623,000,000 |
| |
|
|
| Liabilities |
|
|
| Current Liabilities |
|
|
| Accounts
Payable |
$9,300,000,000 |
$4,483,000,000 |
| Short Term
Debt |
$21,000,000 |
$5,373,000,000 |
| Other
Current Liabilities |
N/A |
N/A |
| Total
Current Liabilities |
$9,321,000,000 |
$9,856,000,000 |
| |
|
|
| Long-Term Liabilities |
|
|
| Long Term
Debt |
$835,000,000 |
$854,000,000 |
| Other
Liabilities |
$1,004,000,000 |
$902,000,000 |
| Deferred
Long Term Liability Charges |
$358,000,000 |
$498,000,000 |
| Minority
Interest |
N/A |
N/A |
| Total
Liabilities |
$11,518,000,000 |
$12,110,000,000 |
| |
|
|
| Shareholder's
Equity |
|
|
|
Misc. Stock Option Warrants |
N/A |
N/A |
|
Redeemable Preferred |
N/A |
N/A |
|
Preferred Stock |
N/A |
N/A |
| Common
Stock |
$870,000,000 |
$867,000,000 |
| Retained
Earnings |
$21,265,000,000 |
$20,773,000,000 |
| Treasury
Stock |
($13,293,000,000) |
($13,160,000,000) |
| Capital
Surplus |
$3,196,000,000 |
$2,584,000,000 |
| Other
Stockholder Equity |
($2,722,000,000) |
($1,551,000,000) |
| Total
Stock Holder Equity |
$9,316,000,000 |
$9,513,000,000 |
| Net Assets |
$7,399,000,000 |
$7,553,000,000 |
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