Your understanding of the financial statement helps when computing financial metrics. For instance, when we calculate the return on assets, we know that we take the after-tax operating income from the income statement. We retrieve the average total assets from the balance sheet. Below, I am providing a brief balance sheet. 

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Financial Performance Evaluation

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Assets = Liabilities + Owner’s Equity

ASSETS

Current Assets

  Cash

  Accounts Receivables

  Inventory

  Prepaid Expenses

Long-Term Assets

  Land

  Building

  Machinery

  Equipment

LIABILITIES

Current Liabilities

  Accounts Payable

  Wages and Salaries Payable

  Taxes Payable

  Interest Payable

Long-Term Liabilities

  Notes Payable

  Bonds Payable

OWNERS’ EQUITY

Beginning Balance

Net Income

Ending Balance

 

How is the information in the brief balance sheet related to what you already know? For more information on Financial Performance Evaluation read this: https://en.wikipedia.org/wiki/Financial_analysis

Financial Performance Evaluation

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