Balance sheet: The balance sheet consists of assets and liabilities.
The assets side of the balance sheet contains all the assets of a company and is sorted by increasing liquidity (convertibility into cash). A distinction is made between fixed and current assets.
– Fixed assets are long-term assets that are expected to remain in service for more than one year. These investments remain in possession of the company for a long time. There are 3 types: intangible (patents, licences, capitalisation of expenses,…), tangible (machines, buildings, vehicles,…) or financial (long-term investments, shareholdings, loans,…).
– Current assets, on the other hand, are tied to the trading cycle (activity) and will therefore be converted, sold or consumed into cash within a maximum of one year. These are stocks, trade receivables and cash. As a result of its activity, the company will add value to its inventories and thereby pay off its debts. Current assets are easily converted into cash and are therefore the so-called short-term assets.
The liabilities contain all the company’s funds. They are divided into equity capital and borrowed capital and are sorted by decreasing liquidity.
– Equity capital is the amount of capital invested by the owners of the company, together with the generated profit, which was reinvested . The equity capital is the financial basis on which the company will build its growth capacity and will determine its financial independence.
– The borrowed capital gives an overview of the company’s debts towards external parties in order to pay for its assets and can be divided into long-term and short-term debts.
The debts of more than one year are covered by long-term debt. This includes, for example, the investment credits/loans.
Short-term debt includes debts to be paid within a maximum of one year. Many of these debts belong to the company’s trading cycle (trade debts, VAT, remunerations, …).
The income statement records all costs incurred and income earned in the past financial year. It shows whether the company has made a profit or a loss. Occasionally, it is also referred to as the profit and loss account or operating account.
The comments provide more information about the large aggregates published by the company and the valuation rules used in the balance sheet and income statement.
Social balance sheet:
The social balance sheet provides information on the staff such as the total number of staff members, recruitment, dismissals, in short the workforce, and training.