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Here's an explanation of all Terms and Parts of the Balance Sheet in one Tweet: Active Side (Non-Current Assets) Intangible Assets: Intangible assets are not physical, such as a patent, brand, trademark, or copyright. If this is a high portion of assets, check if the value makes sense to you. It's relatively easy to overstate the value of intangible assets. Goodwill: Goodwill is the result of a purchase of another company (merger). It's the difference between the purchase price and the net fair value of all the assets bought (book value of the purchased company). If goodwill is a large part of the assets, you should check whether the surcharge was justified. You want to avoid paying the price of bad mergers. Property, Plant, and Equipment: Property, plant, and equipment (PP&E) are factories, branches, vehicle fleets, devices, machines, and plots of land. Generally, physical/tangible long-term assets held by the company. Financial Assets: Financial assets are securities permanently owned by the company. This includes financial receivables, capital market securities, and investments in third-party companies. (Current Assets) Inventories: The inventories are divided into three subcategories: 1. Raw materials and supplies 2. Unfinished Products 3. Finished Products and Goods Accounts Receivables: All claims of the company against third parties. For example, when a third party bought goods and didn't pay for them on the spot. Cash and Cash Equivalents: This position contains all liquid funds. Cash on hand, bank balances, and short-term securities like money market funds. Passive Side Shareholders' Equity: Shareholders' Equity is the part of the assets available to the company after deducting all liabilities. That's money a company could return to shareholders if all its assets were converted to cash and all its debts were paid off. Shareholders' Equity is made up of: 1. Initial Investment from Shareholders 2. Additional Paid-in Capital (the difference between the par value of the stock and the price each has sold for) 3. Retained Earnings (Money that isn't paid out to shareholders) 4. Treasury stock (shares that have been repurchased from investors by the company) (Current Liabilities) Accounts Payable: The passive side equivalent of accounts receivable. Supplier credits, i.e. invoices for deliveries and services that still need to be paid. Notes Payable: This position contains interest-bearing debt with a term of less than one year. This includes bonds that are due soon or short-term bank loans. (Non-Current Liabilities) Long-Term Debt: This position contains interest-bearing debt with more than one year term. Most common are bank loans and bonds. General Provisions: If a company anticipates future losses due to ongoing legal processes, guarantees, or taxes, it builds general provisions. This is particularly important when the probability of occurrence and amount are uncertain. Do you want a similar tweet for the Cash Flow Statement? Please let me know in the Comments! Like and Retweet to help the reach!

If you want to learn more about the Financial Statements and you have 4 minutes of time, look at this article: danielmnke.com/p/how-to-anal…