Question
Uses of Balance Sheet
Answer :
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Below are some of the uses and importance of a balance sheet: 1. To Determine If Working Capital is Enough
The balance sheet is used to determine if the business has enough working capital to sustain its operation. Working capital is the difference of current assets less current liabilities. It measures if the company still has enough current resources after deducting its due loan or obligations. If the result of computation is positive, that means the company is still doing okay. On the other hand, if the computation becomes negative, that means the company is in trouble. Theres a high risk of bankruptcy or inability to continue operating.
2. To Know the Business Net Worth
Net Worth is defined as the true value of an entity. It shows how rich
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