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BALANCE SHEET - Coggle Diagram

- - - - To establish a business requires investing and putting into motion a set of values of different kinds, such as cash, merchandise, machinery, etc. Also due to this movement, there may be debts in favor of the employer, constituting as a whole the amount of their ASSETS.
  - - - The normal operating cycle of a company is the time that elapses on average between the acquisition of materials and supplies, and the conversion into cash of the properly finished product.
        If it is a commercial company, it is the time that elapses between the acquisition of the goods and their respective sale.
        On the other hand, in agricultural companies it is the average time that elapses between sowing and the subsequent harvest.
        
        Cash It is made up of petty cash, fixed funds for returns and bank accounts, generally. Cash is recorded at its declared value (nominal value).
        
        Available securities or investments It is made up of temporary (short-term) investments of financial resources: Term certificates of deposit, with a maturity of less than one year, investment funds whose enforceability is less than one year, investments in the stock market, etc.
        
        Accounts and documents receivable.
        It is represented by the money that customers and other people and companies owe to the entity, whose recovery is expected to take place in a period of less than one year. Among the most common we have:
        • Trade accounts receivable.
        • Accounts receivable employees.
        • Accounts receivable partners.
        • Subsidiary accounts receivable.
      - Stocks. Formerly known as inventories, it is constituted by the value of merchandise, materials and supplies, duly valued through methods allowed by the Tax Administration of the country, whose purpose is to be sold or transformed into finished goods for sale, as part of the normal business cycle.
        
        Items paid in advance. Included as prepaid items are all those that are expected to be consumed in a period equal to or less than one year, for example, insurance premiums, advance taxes (Partial Payments of Income Tax, Withholdings of 2% of the same tax, etc. .), stationery inventory (It is not included as part of the inventory, since its purpose is to be consumed by the same company, so its consumption must be passed on to spending), advances to suppliers, various advances, etc.
      - Non-current assets. Non-current assets are made up of those financial representations or items whose objective is not to be sold, at least in the short term (one year), and / or that are used directly in the operation of the business, the investments that the company has made. entity, in bonds, stocks and others, whose objective is to obtain benefits and income in the medium and long term, as well as those assets of an intangible nature that the company owns.
        
        The most common items within Non-Current Assets are:
        
        Long-term investments. This classification of non-current assets frequently includes items such as: • Investments in securities such as bonds, common shares of other entities and investment funds.
        
        Investments in tangible fixed assets, whose purpose is not to be used in the normal course of business, for example, land that is held in order to obtain a capital gain.
        
        Investments for specific purposes, such as investment funds for the expansion of the plant or facilities, investment funds for the renewal of machinery and / or technology and private retirement funds (pension), as long as their use or remission occurs in periods of more than one year.
        
        Intangible asset. This classification is made up of assets that are not of a material type. It includes, for example, patents, literary rights, intellectual property rights, concessions, franchises, trademarks, trade names and secret formulas, among others.
        
        Another asset. The possibilities of classifying items under this heading is extremely wide, but, in general, this includes deferred charges that have to be amortized in the medium and long term, for example, the expenses of organizing a company, guarantee deposits and compliance guarantees for contracting processes with the Government (Tenders).
- - - - The most common cases of short-term liabilities are:
        • Bank overdrafts. In certain cases, companies have the possibility, duly authorized, of exceeding a certain limit in their bank accounts.
        • Trade accounts payable. They are the obligations that result from the use of commercial credit with suppliers of goods and services, which is used in the normal course of business.
        • Accumulated wages payable. This classification is used when, at the balance sheet date, the company has incurred expenses for wages and salaries, which it has not yet paid to its employees.
        • Taxes to pay. It is included under this denomination, those sums that the company owes to the Government, on the occasion of the collection of indirect taxes, such as sales or income.
        • Withholdings payable. It originates from the withholdings, mainly of a labor type, that employers make on the salary of the people, by concept of the Costa Rican Social Security Fund (8%) and the Popular and Community Development Bank (1%), as well as deducted fees for Unions, Cooperatives, Solidarity Associations, loan installments with them, and with financial entities, etc.
        • Anticipated income. These items originate from the capture, by the company, of various types of advances from customers, mainly.
        • Dividends payable. Once the payment of dividends or surpluses has been decreed, depending on the type of entity, the part that is withdrawn from the Undistributed Profits must be temporarily recorded as Dividends payable.
        • Operations and documents payable. Bank debt and with other entities and people, such as partners, whose cancellation is expected to be in a period of less than one year.
      - Long-term liabilities.
        Long-term liabilities consist of obligations that are reasonably expected to be paid in a period greater than one year.
        
        The items that frequently form part of long-term liabilities are the following:
        • Documents payable: They come from specific financing situations, for the acquisition or construction of assets, with financial entities or even with partners, whose cancellation period is greater than one year.
        • Bonds payable. Although in Costa Rica this type of financing tools is not frequent, in other countries, especially those with developed financial systems, companies issue bonds, which they place in the market, at attractive rates, as a means of financing their operations. These types of issues are usually for long terms.
- - - - REASONS FOR DEBT These reasons indicate the amount of third-party money used to generate profits, these are of great importance since these debts compromise the company over time.
        
        DEBT RATIO (RE): Measures the proportion of total assets contributed by the company's creditors.
        
        LIABILITY-CAPITAL RATIO (RPC): Indicates the relationship between long-term funds provided by creditors and those provided by company owners.
        
        LIABILITY TO TOTAL CAPITALIZATION RATIO (RPCT): It has the same objective as the previous ratio, but it also serves to calculate the percentage of long-term funds provided by creditors, including long-term debts such as equity.