QuickBooks demo company

A balance sheet is an essential way to evaluate a business’ financial health, and can be calculated every month, quarter or half-year to create a snapshot of a company’s net worth.

In this article we will be discussing how to calculate an annual balance sheet for a business. Creating an annual balance sheet will help you evaluate the equilibrium between your company’s assets against its liabilities, to determine the overall financial strength and value of your business. For an example of a full balance sheet, click here or scroll down to see the example at the end.

1. Understand the Basic Equation

The following equation is a simplified representation of what a Balance Sheet calculates: the total sum of your company’s assets equals the value of the company’s liabilities and owner’s equity.

Assets = Liabilities + Owner’s Equity

As with any math equation, you can play around with the equation to isolate one category. Most business owners and investors use the following equation to calculate the value of the company’s equity.

Owner’s Equity = Assets – Liabilities

2. Calculate Assets

Assets, money, investments and products the business owns that can be converted into cash: These are what put companies in the financial positive. A thriving company should have assets that are greater than the sum of its liabilities; this creates value in the company’s equity or stock, and opens up opportunities for financing.

It’s important to list your assets by their liquidity—the facility by which they can be turned into cash—starting with cash itself and moving into long-term investments at the end of the list. For the purpose of an annual balance sheet, you can separate your list between “Current Assets, ” anything that can be converted into cash within a year or less, and “Fixed Assets, ” long-term possessions that can be sold or that retain value down the line, minus depreciation.

QuickBooks Demo

QuickBooks Mac OS x 10.6

QuickBooks POS VS ShopKeep

QuickBooks POS v11 patch

QuickBooks Pro POS system