A balance sheet is a statement of financial position. It is used by businesses to indicate their financial strength at a certain point in time. A balance sheet is one of the important financial documents prepared by companies at the end of their accounting period. It helps managers and shareholders have an overview of the performance of their business. Furthermore, there are also external users of this financial information who need it to make financial decisions on their future relationship with the business in question.
There are financial ratios that can be calculated from the balance sheet. These ratios point to a specific state of the business performance and the users of this information can know the liquidity position and efficiency of the business. You can know if the business will remain to be a going concern or not. You can then make informed financial decisions and prepare for their consequences.
The position of life.
Life is like a business; it can either be profitable or make losses. You are in the manager’s seat and it is your responsibility to manage your business well. Shareholders and investors are interested in your business and waiting to see its statement of financial position. Your job as the manager of your life is to ensure that your business remains to be a going on concern and that you can convince the investors to continue funding you with the promise of greater profitability (which you are hopefully going to fulfill).
The universe is one of your greatest investors. He has pumped his resources into your life and will continue to do so if he sees light in your books of accounts. He is one of the investors who love you unconditionally. It would be a pity to disappoint him.
What is on your balance sheet?
Current assets are the items that can quickly be converted to cash. They are important in paying daily business expenses, bills, and loans. A business needs to have cash at hand or at the bank to meet these expenses for it to run smoothly.
Your life also needs current assets. They will help you to manage your life without a hitch. Nature provides you with free current assets like oxygen and the energy to wake up daily to work on your business (life). Being alive is a current asset from nature. Use it to meet your business needs and grow your empire.
Non-current assets are long-term investments. Unlike current assets, they cannot easily be converted to cash but they are still useful to the business. They are items like land, plant and machinery, and motor vehicles. A business uses them to generate income and enough current assets to run the business.
You also need non-current items in your life. They will help you to generate long-term revenue. They also help you to pursue your purpose and life mission. Non-current assets in your life are the gifts of nature to you, specifically talents. The universe has given everybody a talent. Use it to secure your life’s future and improve the figures on your balance sheet. Use your talents of innovation, teamwork, and communication to improve your life.
Current liabilities are the obligations you must meet within one year in business. It is mandatory to settle these expenses for your business to remain a going on concern. They are interest payable, bank overdraft, taxes, salaries and wages, and rent among others.
There are also current liabilities in your life that you must settle as soon as possible. Failing to do so sabotages your chances of success. It is mandatory to settle current liabilities within a time frame. They are physical exercise and a nutritious diet. Your body needs both of them to be healthy. They license your health for the rest of your life for you to comfortably pursue your life’s mission.
Non-current liabilities are long-term obligations to be settled by the business beyond one year. It is still mandatory to meet them only that you have a longer time frame to do so. They are items like long-term bank loans, leases, deferred tax liabilities, and bonds payable. Investors are worried when the value of non-current liabilities is high and there is not enough cash flow to meet them when they fall due.
There are also non-current liabilities in our lives that the universe wants us to closely look at. The major one is corporate social responsibility. The universe is watching how you give back to the community that has supported you to achieve your dreams. As your greatest investor, the universe will open more doors of blessings when you meet the non-current liabilities in your life. It will otherwise refuse to invest further in your life if you become selfish. A candle does not get dim by lighting another one.
Capital and Equity.
Capital and equity are the funds invested in a business by its owners. A business needs capital and equity to get off the ground and begin its operations. It recoups the initial investment when it breaks even. Thereafter, it starts being profitable to its shareholders. A balance sheet is incomplete without the capital and equity section. It is important to know the value the business required to take off.
The journey of your life equally needs capital and equity to take off. Investors believe in your dreams and hold your hand while at it. They first believe in you then in your dream. They are sure that their investment will pay off eventually. The first person to believe in you is the universe. He believes in you to invest non-current assets in your life. Other investors are your family and friends who support and cheer you. The capital and equity in your business determine the nature of the business you can undertake. You have to grow this base.
What does your balance sheet in the universe speak about you?
The balance sheet formula is Assets = Liabilities + Equity.
Balance your statement of financial position in the universe.