Want to have a look at the financial health of Walmart based on the very latest quarterly balance sheet information? Then use the Financial Health analysis of Walmart on the Simply Wall Street site: bit.ly/3frHIsg
I'm in the first year of my master's degree and was very confused about a lot of things, I watched some of your videos. I'm so glad I found someone who can explain in such an easy way! Thank you for that :)
Lie how you get get through undergrad without know this lol? That's like a nursing getting into the nursing program but don't understand basic of biology. Iam just saying.
@@TheFinanceStoryteller Will do! But I think most of your viewers find you by search when we need it. Not just for fun. Hope the feedback helps :) + Man 55 000 followers is more than enough to start monetizing your audience. Read the "1000 true fans" article or the update: a16z.com/2020/02/06/100-true-fans/
Thanks for sharing the article. I think it is very optimistic about the monetization potential. Still, I am grateful for the (limited amount of) advertising revenue that I do make, and immensely thankful for those that support the channel directly through a membership ruclips.net/channel/UCQQJnyU8fALcOqqpyyIN4sgjoin
I now regret my decision of joining a $300 accounting course and ended up not following most of the lessons due to my full-time job when there exist channels like yours the whole time. Good thing is, there's no need for me to spend more $300 in the future!
Welcome to the channel! I would recommend the following playlists: Accounting 101 ruclips.net/video/b93KBmcXanI/видео.html&pp=gAQBiAQB Intermediate accounting ruclips.net/video/lBvnSgIGVnU/видео.html&pp=gAQBiAQB Finance case studies ruclips.net/video/Hq-44PHgAiU/видео.html&pp=gAQBiAQB If you have questions about a particular topic, please ask them in a comment below the specific video, and I will try to help wherever I can. You got this!
Please do a longer video (about an hour long) on the same topic going into further detail on what to make of the different numbers and how to value a company.
Hello Tejbir! I have long ago stopped trying to "value a company" (as in: trying to calculate what I think the share price potential could be versus what a company is currently trading for) due to the severe limitations of methods like WACC ruclips.net/video/1O-DbtVueMw/видео.html Instead, I look for organic revenue growth (or the potential for it), operating margin improvement, free cash flow generation (depending on the stage of the business lifecycle the company is in ruclips.net/video/UGd2llFBiMA/видео.html ), and fragility/robustness/antifragility of a company. See my video on financial analysis: ruclips.net/video/jG-oXx54qxE/видео.html If you want to zoom in further on various line items that make up the balance sheet, then this playlist could be helpful: ruclips.net/video/5bWodpqRSYU/видео.html Hope this helps a bit, even do I did not directly answer your question most probably.
Thank you, Shikhar! I completely agree. :-) I love doing the research for these.... Learning so much along the way, and then summarizing for my viewers. Here's the link to a playlist with case studies: Walmart, Airbus, Tesla, Alphabet Inc (Google), Amazon, Facebook, etc. ruclips.net/video/PI9X5Ybek_E/видео.html
Great to hear, Amal! I have videos on the income statement ruclips.net/video/Hq-44PHgAiU/видео.html and the cash flow statement ruclips.net/video/mZBjsIYrLvM/видео.html as well that might be helpful for you. Plus a lot of videos that dive into the detail of these, you will find those when you browse the channel videos. Please subscribe!
Wishing you lots of success! My playlists organize the videos by topic: investing, accounting, balance sheet, finance case studies, etc. Have a browse through them!
So happy to hear that, Gokul! Welcome to the channel. I hope you find a lot of useful videos. Please tell your friends and colleagues about the channel! :-)
As a student. I really love to watch your video which has good quality content. I love to follow your youtube content with my studying and investing career.
Wow, thank you!!! Please share the channel with fellow students. Speaking for myself, I learn most from approaching concepts in a real world setting, that's why I enjoy making the finance case studies videos (about real companies that you have certainly heard of!) so much: ruclips.net/video/ya7rRZJCLEc/видео.html I think the balance sheet comparison Google vs Facebook might be useful for you!
My schoolteacher is just so boring and after multiple lessons I still didn’t get this, but now after watching this video it’s finally more clear! Thanks! 👍🏼
Wonderful to hear that! I have similar videos explaining the income statement ruclips.net/video/Hq-44PHgAiU/видео.html and cash flow statement ruclips.net/video/mZBjsIYrLvM/видео.html
I like the title of your channel! I also like the conceptual foundation you lay first and then the actual use of the concepts using examples. Thanks. :)) Keep Smiling
Hi, I've had a problem finding information about this, I do not fully understand the Equity section of the balance sheet. Equity is what would be left (theoretically) if the company paid back all its liabilities, but what does equity concretely mean? If the company has 80bln of Retained Earnings does it mean that the company has 80 bln cash sitting there belonging to shareholders and so they can't use it to finance their operations? I fail to understand what Equity practically amounts to, are the figures in the balance sheet just theoretical and in practice there isn't anything physical rappresenting Equity if not the difference between Assets and Liabilities? Thank you so much
Ciao Alessandro! I have some answers for you in the form of two videos: "What is equity" ruclips.net/video/Q1z395u60xU/видео.html and "Balance sheet and income statement relationship" (how a company gets started, business steps and financial steps, how equity is an element of it) ruclips.net/video/wZdaVEX41WQ/видео.html Let me know if these help to clarify!
I love your videos. They're so clear and to the point. I've been looking into getting a bit of know how of how finance and money works and your videos have helped me a lot.
Thank you, Tessy! In my view, the best way to learn how to read and analyze financial statements, is to go through lots of them, maybe my finance case studies playlist can help: ruclips.net/video/PI9X5Ybek_E/видео.html Plenty of balance sheets, income statements and cash flow statements being reviewed in there! ;-)
You're welcome! Some more real life examples of the balance sheet and other financial statements in this playlist: ruclips.net/video/ya7rRZJCLEc/видео.html
Nice to hear that!!! I have more examples of each of the financial statements in my finance case studies playlist: ruclips.net/video/PI9X5Ybek_E/видео.html
Great explanation thanks. Will be watching a lot of your content over the coming months to help study this subject. I couldn't find any content though going into more depth explaining why the balance sheet needs to be equal?
Welcome to the channel!!! More case studies of the financial statements in this playlist: ruclips.net/video/PI9X5Ybek_E/видео.html The balance sheet needs to balance due to a concept called the accounting equation: ruclips.net/video/OYql7Y9NnBg/видео.html And once you understand the interaction between income statement and balance sheet, things start to fall into place ;-) ruclips.net/video/wZdaVEX41WQ/видео.html
Happy to help! Even though there are large similarities, every balance sheet has its own peculiar elements. Have a look at the balance sheet of Apple ruclips.net/video/J_1F8GoLOI8/видео.html and/or Tesla ruclips.net/video/4xT5JzEPHtw/видео.html to learn more.
Hahahaha! Thank you, Pradeep! I have noted the date and time of your prediction. Please tell all your friends, family, neighbours, etc. about the channel so I can grow to 100K subscribers as soon as possible. ;-) Oh, and make sure to watch my related finance case studies in this playlist: ruclips.net/video/PI9X5Ybek_E/видео.html
The Finance Storyteller I will definitely watch all your videos. The thing is that there’s a whole bunch of young people just getting into finance and videos like yours cut through the crap and simplify things and deliver information effectively. Its my first time here but you’ll definitely see a lot more of me hehe as long as I find the time 👍🏻👍🏻
Thank you, that is a wonderful description! Yes, I base my videos on real life experience of working in finance for many years, and then working with audiences of business people (most of them without a finance background) to help them make sense of financial statements, financial concepts, etc.
I just do not understnad. why do the both sides of the balance sheet have to be the same amount? What if assets are more? whats is wrong with it? how can u guranntee that a company always has the same amount ton the both sides
Hi Ketitammo! Nice to hear from you. Yes, the balance sheet always has to balance. Assets equal liabilities plus equity, see the accounting equation: ruclips.net/video/OYql7Y9NnBg/видео.html If assets grow quicker than liabilities during the year, that would mean that the company is profitable, and at the end of the year that profit gets added to equity, and once again the balance sheet balances. Take a look at my video on the relationship between balance sheet and income statement for an example: ruclips.net/video/wZdaVEX41WQ/видео.html Hope that helps!
@@TheFinanceStoryteller thank you so much for answering. I have subscribed your channel and am watching ally he videos One more question- balance sheet is like a snapshot for the given moment, right? I understand that in December of the year, the profit goes to the equity. But in the moment X, when I took the snapshot what could my assets CANNOT be more than liabilities? Or does it work like this - we have liability XX, as soon as assets are XX+1, that "1" will be sent to equity account?
Good thinking, but you are missing a small piece of the puzzle. During an accounting period (let's say the month of December per your example), the general ledger is open for journal entries. Those journal entries could either affect what is called permanent accounts or temporary accounts. During the month, the finance and accounting team normally does not produce any balance sheet. We might look at individual balances in the subledger or general ledger, to see if business results are progressing in line with expectations, but we don't "close" the period yet. Only when the accounting period is closed, do we add the profit for the period to equity (or subtract the loss for the period from equity). So you could say that during the accounting period, the "in progress" balance sheet does not balance, but the difference is explained by the total amount of the "in progress" income statement. Maybe my video on closing entries in accounting might help: ruclips.net/video/CXiKLtb7tqI/видео.html or the one on retained earnings ruclips.net/video/xiwQh5E7JWQ/видео.html
The company is an entity, the shareholder is a separate entity. The company owes the shareholder capital to the shareholder. For more, see my video called "What is equity": ruclips.net/video/Q1z395u60xU/видео.html
Thank you! I have recently done a deep dive on the latest balance sheet of Apple ruclips.net/video/J_1F8GoLOI8/видео.html and Tesla ruclips.net/video/4xT5JzEPHtw/видео.html as well. Some very interesting findings there!!!
Hi! A nice perspective on applying Walmart to the analysis when explaining the balance sheet. If interested I just made a deep dive into the consolidated balance sheet of Apple 2022 /Best regards KME
Greetings from the Netherlands to Sweden! Wishing you lots of success with your channel. I have done a few videos on Apple as well over the years, it's a company that a lot of people know and are interested in.
Hi, I am currently looking at a companies balance sheet as I was following your video. When I came to the section that has "retained earnings" it was in "-" what does this mean? As my understanding from your video is that this is the retained earnings made from the companies previous profit made that has not been paid to its shareholders. Thus, if this figure is in minus does it mean the same as above? As I did not se a "-" symbol in Walmarts example. Great Video! Hope the question makes sense.
Hello Lex! Retained earnings can be a positive number, or a negative number. In case it is a negative number, you could call it accumulated deficit. See for example the Tesla balance sheet of year end 2019. Accumulated deficit is the sum of the historical losses from the income statement. Walmart's retained earnings are a very high positive number, as they have been profitable for many years, and have only paid out part of those profits in dividend. More on retained earnings in the video of that name on my channel: ruclips.net/video/xiwQh5E7JWQ/видео.html
Hello Laura! The balance sheet is a picture at a point in time, while the income statement is more like a movie of what happened during the period. If a company is profitable (revenue exceeds expenses), then assets grow quicker than liabilities, and the difference between those numbers gets added to equity. Have a look at my video on the relationship between income statement and balance sheet to see how that works: ruclips.net/video/wZdaVEX41WQ/видео.html Or for a more "technical" accounting discussion of the same point, either ruclips.net/video/CXiKLtb7tqI/видео.html or ruclips.net/video/n-lCd3TZA8M/видео.html
You're welcome! I have more videos on balance sheet, income statement and cash flow statement in this playlist: ruclips.net/video/PI9X5Ybek_E/видео.html
You're welcome, Raj! I have more finance case studies in this playlist, including walk-through of each financial statement: ruclips.net/video/PI9X5Ybek_E/видео.html
Hello Elbay! Well spotted. This is a very unusual thing. Normally companies have "taxes payable" on the liabilities side of the balance sheet (if the income has been earned, but taxes have not been paid in cash yet). If there are receivables from the government for income taxes, then it could be that Walmart overpaid in the past, and is waiting for a repayment that is due to them. Unfortunately, we don't get an overview of exactly how much money is specifically related to governments, just that the total receivables (from customers, insurance companies, banks, suppliers, government) net were $2.9 billion.
If a company is profitable, then its assets are growing quicker than its liabilities. To counterbalance that, we have retained earnings as part of equity. Per the accounting equation assets = liabilities + equity. For an example of how retained earnings occur (at the end of the year, when you need to add/subtract the result of the income statement to equity in order for the balance sheet to balance), see ruclips.net/video/wZdaVEX41WQ/видео.html This video specifically discusses retained earnings ruclips.net/video/xiwQh5E7JWQ/видео.html
What if the total on liabilities side is more than the total on assets side when the company has more debt than it's assets value??is there any possibility of this??
Hello Kirthik! Yes, that is certainly possible. It would mean that the company is in a poor financial state. My video on solvency and liquidity discusses this situation: ruclips.net/video/z4zrQ3saMsI/видео.html
That is wonderful to her, Sheena!!! Here's another balance sheet case study: ruclips.net/video/XKSOswE-_6c/видео.html and one about the income statement: ruclips.net/video/Hq-44PHgAiU/видео.html and one about the cash flow statement: ruclips.net/video/mZBjsIYrLvM/видео.html 😎
Good timing to watch the video then! I can recommend a 5-minute related video that shows how the income statement and balance sheet interact ruclips.net/video/wZdaVEX41WQ/видео.html and a playlist covering various accounts on the balance sheet in more detail (as well as walking through more real world balance sheets like those of Apple and Tesla) ruclips.net/video/J_1F8GoLOI8/видео.html&pp=gAQBiAQB Enjoy! Wishing you all the best with your presentation.
Great video however do u have a version that is in plain English (not using complex accounting jargon?) Ex: 1:48 you say “Book value of the shareholders capital”, so therefore what is book value, and what is shareholder capital. The thing I’m finding confusing is all the videos use accounting jargon and not plain English.
Hi! I can point you to related videos to explain those. Book value vs market value ruclips.net/video/uCs9AyGIb3c/видео.html What is equity ruclips.net/video/Q1z395u60xU/видео.html
You are welcome! :-) I have similar videos on the income statement ruclips.net/video/Hq-44PHgAiU/видео.html and the cash flow statement ruclips.net/video/mZBjsIYrLvM/видео.html as well, these could also be helpful for you.
Hi Carley! Retained earnings is not a liability, it is part of equity: ruclips.net/video/xiwQh5E7JWQ/видео.html For goodwill, I have a specific video as well: ruclips.net/video/yq9qjCmUfS4/видео.html Basically, goodwill gets onto the balance sheet as an asset as part of an acquisition, for example debit net assets acquired $2B debit goodwill $1B credit cash $3B (in the books of the acquiring entity). In case of a goodwill impairment, the company books debit impairment expense (in the income statement) $1B, credit goodwill (balance sheet). This impairment loss is then deducted from equity when the balance sheet is put together. Hope that helps! Let me know if you have any other questions.
As far as I have experience with it (which is limited), non-controlling interests tend to come into existence during an acquisition (of less than 100% of the acquired company). See the case study of Walmart buying 81% of the outstanding shares of Flipkart: ruclips.net/video/wneoAaNZv8E/видео.html Preferred stock can be issued "by itself" in a public offering. For example, take a look at the Boston Scientific 2020 annual report. On May 27, 2020, Boston Scientific completed an offering of 10,062,500 shares of 5.50% Mandatory Convertible Preferred Stock (MCPS).
Hi Finance Storyteller in your Walmart balance sheet explanation at 5:14 , you mentioned ' .... in terms of the amounts, the lease are pretty much offset by the short-term lease obligations & long-term lease obligations'. What could be a narrative or (real) reasons for the operating lease in the asset 17,424 and operating lease in the liabilities 1,793 + 16,171 = 17,964 , not equal? The same question for finance lease 4,417 and 4,818 ? Well, as a newbie i thought all those add ups must all come out equal. Do they have anything related to 'net impact on the balance sheet .. zero'? Help me understand please :)
Hello Yenny! On the balance sheet, a lessee is required to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments. I would guess that this lease liability is bigger than the lease asset due to the financing component (interest). If you want to know more, I would suggest for you to study new leasing standard ASC 842 (US GAAP) or IFRS 15 (IFRS).
Hello Sanjay! It's not necessarily about any individual line, but more about the "composition" of the balance sheet in total. See my side-by-side comparison of the balance sheets of two competing companies: Google vs Facebook ruclips.net/video/ya7rRZJCLEc/видео.html
Hi Yilma! In the video, I discuss the book value of the shareholder capital, which is equity on the balance sheet. You could also talk about "book value of the inventory", or the "book value of a machine", but let's stick to book value of equity for now. Book value, or accounting value, is based on a company’s historical financial results, looking back. You use a company’s latest balance sheet to come up with the book value of the equity, you look up the number of shares outstanding (which is usually mentioned in the earnings per share calculation in the income statement), and when you divide the two numbers you get the book value per share. More discussion and explanation in my video called book value vs market value ruclips.net/video/uCs9AyGIb3c/видео.html
Good question! It certainly would not be a good thing for equity to be negative. Per the accounting equation assets = liabilities + equity ruclips.net/video/OYql7Y9NnBg/видео.html Negative equity does not immediately mean bankruptcy, as there could be "technical" accounting factors causing that (like currency translation adjustment), but it is certainly a big concern. Bankruptcy only occurs if a company is unable to pay its creditors and somebody takes the company to court to demand payment (getting the company declared bankrupt may be a step in that).
If company have assets that is trades in open markets (stocks) how that frequently change price reflects on BALANCE SHEET? As a price snapshot of each quarter report? Does company obligated to mention those prices on any other reports for a public?
Hi Dmitry! That depends on what type of company you are looking at (bank, insurance company, manufacturing). This is an area called accounting based on historical cost (where companies might have unrealized gains "hidden" in the assets on their balance sheet), versus fair value accounting (where companies constantly adjust for latest market price of assets). And then the second question is whether any gains/losses are recognized in net income, or through other comprehensive income: ruclips.net/video/f4-2f7T4rp8/видео.html
You're welcome! More of these case studies in my finance case studies list. Here's a side-by-side comparison of the balance sheets of Facebook and Google: ruclips.net/video/ya7rRZJCLEc/видео.html
That lowers the amount of outstanding debt. On the balance sheet, you are looking at the net amount (original amount borrowed minus what has been repaid so far).
In addition to my previous answer: in the cash flow statement, a repayment of debt is shown as a cash outflow in the Cash From Financing Activities (CFFA) section, as repaying debt is a use of cash. See ruclips.net/video/mZBjsIYrLvM/видео.html and/or ruclips.net/video/xw67FIeVsj8/видео.html
Hi Jessie! I would talk about year-to-date in the case of income statement accounts (revenue May year-to-date, COGS May year-to-date). For balance sheet accounts like AP and AR (also called "permanent accounts"), you are always looking at the current balance "at a point in time"(assuming all transactions have been properly recorded).
I assume that the company is borrowing money from the director, hence a liability for the company. Either current liabilities (if it is to be paid back within 1 year) or non-current liabilities (for a long term loan).
Hello! The balance sheet has to balance by definition. What we own (assets) on the left, has to be equal to what we owe (liabilities and equity) on the right. See also my video on the accounting equation: ruclips.net/video/OYql7Y9NnBg/видео.html What Walmart (and pretty much every other company) does try to do, is be profitable.... In that case, your assets grow quicker than your liabilities, and your equity goes up. The balance sheet still balances, but on the right hand side, the equity gets bigger in comparison to the liabilities. Take a look at my video on the relationship between income statement and balance sheet to understand the interactions: ruclips.net/video/wZdaVEX41WQ/видео.html Hope this helps!
@@TheFinanceStoryteller oh I see. I see yes. The equity makes for the difference in the end really cause your paying those people back at a higher percentage....Is that right?
Almost right, you are getting there! If a company is profitable, then equity (the book value of the shareholder capital) grows and grows, until the point where the company pays out dividends to those shareholders (which make cash go down on the assets side, and make equity go down as well). The income statement looks at the "flow" of profitability during the year, the balance sheet is the picture at a point in time (year end).
Notes payable are liabilities that indicate the money a company owes its financiers (banks, etc.), while accounts payable are liabilities to suppliers.
@@abby-cv4xc Enjoy your financial accounting class. Even if it seems cryptic or confusing at times.... keep going! Many of the terms you might need are covered in this playlist (beginners) ruclips.net/video/b93KBmcXanI/видео.html or this one (intermediate) ruclips.net/video/lBvnSgIGVnU/видео.html Please spread the word!
Hi Wouter! Did you add the net income you expect during the year to the equity balance at the end of the year (or in the case of making a loss, deduct it from equity)? Here's a video explaining the accounting equation (assets = liabilities + equity) that might help: ruclips.net/video/OYql7Y9NnBg/видео.html And another one on the relationship between income statement and balance sheet ruclips.net/video/wZdaVEX41WQ/видео.html
I have a question about the "long term debt due within one year" how is it payed on 6:54. Is this payed on the year 2020 or is it due to be payed on year 2021 ?
Hi! Within 12 months of the balance sheet date. As the fiscal year of Walmart ends on January 31st, in this case it meant anywhere between February 1st 2020 and January 31st 2021, in other words during what they define as their fiscal year 2021. If you download the Walmart annual report, you will find additional information on specific amounts, types of loan, and interest rates of various loans in Note 6. Short-term Borrowings and Long-term Debt.
Where do retained profits sit in accounting documents? They are not contained in the Balance Sheet, is that right? Are they accounted for in the Income Statement?
Yes, they are in the balance sheet, as part of equity. When a company makes a profit (in the income statement) during the year, then at the end of the year when you put together the balance sheet for December 31st you add those profits to retained earnings (a category within equity). See my video on the relationship between income statement and balance sheet: ruclips.net/video/wZdaVEX41WQ/видео.html or the video on the statement of changes in equity ruclips.net/video/x3bjr3JPedE/видео.html
I always go directly to the Investor Relations section of the company's website and look up the latest financial results. Q3 2023 was published today. I have been an investor in Verizon for a long time, and based on the data I reviewed today, I will hold on to those shares (though not buying any additional ones). My analysis: Slight decline in revenue and operating income versus the same period of the prior year. More than 50% increase in interest expense VPY, as the company is highly leveraged and interest rates are rising. Still a very good net income generator of ~$5B per quarter. As you mentioned, current liabilities of $55.7B are indeed higher than current assets of $38.2B. Not necessarily a big problem. Long term debt has decreased from $140.7B at YE2022 to $134.4B at Q3. That's still a lot in absolute terms and makes Verizon fragile if the interest rates continue to increase. Equity is $99B (and growing) out of a balance sheet total of $385B, so they are moving in the right direction. Quarterly dividend of $0.6650 is more than half of the diluted EPS of $1.13, which is high but doable. Free cash flow year-to-date was $14.6 billion, an increase from $12.4 billion in 2022. For total year 2023, Free cash flow should be above $18 billion, a $1 billion increase from the previously issued guidance. Hope this helps!!! Cash flow statement is the most important to review in this kind of company. To calculate total returns on Verizon stock, have a look at this video: ruclips.net/video/TYzGGOk-8kE/видео.html And yes, I do wish I had sold the shares at their peak. ;-)
@@TheFinanceStoryteller Thank you for your answer. Do you have a website/forum/community where we (your followers) can discuss things like this. I am a business owner and I am trying to learn more about investing.
@@eddiechristianaguilarkleim7599 Thank you for the suggestion! I took a few days to think about it, and decided I don't want to go in that direction, as I do not want to give the impression that I am giving investment advice (I am not!), and don't want to spend the time moderation conversations (I prefer to spend my time on making new videos and responding to questions like yours). If it helps, I do have a playlist with videos around investing (most important are the traps you shouldn't fall into): ruclips.net/video/K4mWd2zBYVk/видео.html&pp=gAQBiAQB One of the videos in that list is "What is an ETF", where I disclose my own stock market portfolio (just for reference, I wouldn't suggest to replicate it!). The great thing is when a stock goes 10X, but those are very rare.
Hi Muhammad! Maybe my videos on the accounting equation ruclips.net/video/OYql7Y9NnBg/видео.html and the one on suspense accounts ruclips.net/video/7_CBmXcJE2Y/видео.html can help you here....
Depends on the type of company you are looking at. For companies that are publicly listed on the stock market, you can download the financial statements (including the balance sheet) from the investor relations section of its website.
Maybe going through a few more examples (balance sheet of Apple and Tesla) will help: ruclips.net/video/J_1F8GoLOI8/видео.html&pp=gAQBiAQB Also, remember that these videos are written from the American/European perspective. The Brits sometimes use net assets (total assets minus liabilities) on the left, and then just equity on the right. And the system in India is different altogether.
Take a look at section ruclips.net/video/eIjCaeNm-Vk/видео.html of the video. In the past (prior to the introduction of the new leasing standard ASC 842 in US GAAP and IFRS16), most leases were off-balance sheet. As the equipment or buildings did not meet the criteria of being an asset, neither the asset nor the related liability were recorded on the balance sheet, hence "understating" the length of the balance sheet on left and right. I think it's a great thing that this is now "fixed", showing a more complete picture of a company's financial position.
Another thought.... there have been cases of accounting misstatements, where the company wanted to show a more favorable debt-to-equity ratio. These involved selling assets just before the end of the quarter or year, using the proceeds to pay down debt, and buying back the assets early in the next period (financed once again by loans). See also: Enron documentary "the smartest guys in the room", section Nigerian oil tanker scam. That's taking "off balance sheet" a few steps too far...
Sorry to hear that! I hope you will keep trying by using various approaches to understanding the topic. Maybe start with the very basics like the accounting equation, debits and credits, double entry accounting, and then take it from there? Here's a playlist covering those accounting topics: ruclips.net/video/b93KBmcXanI/видео.html
Well that was me too, you just need to practice it everyday and get used to it.Think of accounting as gaming.When you first start it you’re like a noob.And when you keep playing everyday you get improved day by day and finally you’re a pro.Imply that on accounts and practically everything, and don’t lose hope.Failures gives us more experience than victories 😁
The 1.8b in deferred income tax though Flipkart.....ye? If that was us, the bailiffs will be here with a pick up truck 😑 Oh, how the rich get away with so much.
Deferred means postponed, they will still have to pay those taxes some day. I recently made a follow-up video specifically on deferred tax liabilities. These apply to businesses big and small, and mostly occur when governments try to provide an incentive for businesses to invest. If you want to know more, here's the link: ruclips.net/video/wom7IBNnXM8/видео.html
Nice to hear that! To learn how financial statements like the balance sheet work, go through a lot of them (from the real world!). I have walk-throughs for Apple, Tesla and others in this playlist: ruclips.net/video/J_1F8GoLOI8/видео.html&pp=gAQBiAQB
![KSI - Thick Of It (feat. Trippie Redd) [Official Music Video]](http://i.ytimg.com/vi/At8v_Yc044Y/mqdefault.jpg)
Want to have a look at the financial health of Walmart based on the very latest quarterly balance sheet information? Then use the Financial Health analysis of Walmart on the Simply Wall Street site: bit.ly/3frHIsg
Amazing videooo
Love from pakistan.
@@Malayamakiya Thank you very much for the kind words! Greetings back from the Netherlands.
I'm in 8th grade and Im curious abt balance bc most people say it's hard
I'm in the first year of my master's degree and was very confused about a lot of things, I watched some of your videos. I'm so glad I found someone who can explain in such an easy way! Thank you for that :)
Wonderful to hear that, Emma! Thank you for the kind words. Please recommend me to fellow students. 🙂
Lie how you get get through undergrad without know this lol?
That's like a nursing getting into the nursing program but don't understand basic of biology.
Iam just saying.
Am just doing this in grade 10 bro
Man you bring me sooo much value through these videos. Thank you!
Glad to hear it, Mathis! Please tell your friends and colleagues, would love to grow the channel.
@@TheFinanceStoryteller Will do! But I think most of your viewers find you by search when we need it. Not just for fun. Hope the feedback helps :)
+ Man 55 000 followers is more than enough to start monetizing your audience. Read the "1000 true fans" article or the update: a16z.com/2020/02/06/100-true-fans/
Thanks for sharing the article. I think it is very optimistic about the monetization potential. Still, I am grateful for the (limited amount of) advertising revenue that I do make, and immensely thankful for those that support the channel directly through a membership ruclips.net/channel/UCQQJnyU8fALcOqqpyyIN4sgjoin
I now regret my decision of joining a $300 accounting course and ended up not following most of the lessons due to my full-time job when there exist channels like yours the whole time. Good thing is, there's no need for me to spend more $300 in the future!
Welcome to the channel! I would recommend the following playlists:
Accounting 101 ruclips.net/video/b93KBmcXanI/видео.html&pp=gAQBiAQB
Intermediate accounting ruclips.net/video/lBvnSgIGVnU/видео.html&pp=gAQBiAQB
Finance case studies ruclips.net/video/Hq-44PHgAiU/видео.html&pp=gAQBiAQB
If you have questions about a particular topic, please ask them in a comment below the specific video, and I will try to help wherever I can. You got this!
Please do a longer video (about an hour long) on the same topic going into further detail on what to make of the different numbers and how to value a company.
Hello Tejbir! I have long ago stopped trying to "value a company" (as in: trying to calculate what I think the share price potential could be versus what a company is currently trading for) due to the severe limitations of methods like WACC ruclips.net/video/1O-DbtVueMw/видео.html
Instead, I look for organic revenue growth (or the potential for it), operating margin improvement, free cash flow generation (depending on the stage of the business lifecycle the company is in ruclips.net/video/UGd2llFBiMA/видео.html ), and fragility/robustness/antifragility of a company. See my video on financial analysis: ruclips.net/video/jG-oXx54qxE/видео.html
If you want to zoom in further on various line items that make up the balance sheet, then this playlist could be helpful: ruclips.net/video/5bWodpqRSYU/видео.html
Hope this helps a bit, even do I did not directly answer your question most probably.
Your channel is a godsend! Thank you very much!
You're welcome! Great to hear that.
Case study based approaches are the best. Real life example and analysis help. 👍🏼
Thank you, Shikhar! I completely agree. :-) I love doing the research for these.... Learning so much along the way, and then summarizing for my viewers. Here's the link to a playlist with case studies: Walmart, Airbus, Tesla, Alphabet Inc (Google), Amazon, Facebook, etc. ruclips.net/video/PI9X5Ybek_E/видео.html
I am taking a business finance course and was very confused, but your video made everything clear, thank you so much!
Great to hear, Amal! I have videos on the income statement ruclips.net/video/Hq-44PHgAiU/видео.html and the cash flow statement ruclips.net/video/mZBjsIYrLvM/видео.html as well that might be helpful for you. Plus a lot of videos that dive into the detail of these, you will find those when you browse the channel videos. Please subscribe!
That’s for sharing and making this so simple. I took corporate accounting years ago and was looking for a refresher. This is very helpful
Glad it was helpful! More case studies of various financial statements in this playlist: ruclips.net/video/Hq-44PHgAiU/видео.html&pp=gAQBiAQB
I have an exam tomorrow about finance and investing and your explanations are really good and easy to understand! Thanks a lot! :)
Wishing you lots of success! My playlists organize the videos by topic: investing, accounting, balance sheet, finance case studies, etc. Have a browse through them!
@@TheFinanceStoryteller I will, thanks for the help:))
I always wanted to learn most of the finance terms... finally I found a right teacher!!! Way to gooooooo❤
So happy to hear that, Gokul! Welcome to the channel. I hope you find a lot of useful videos. Please tell your friends and colleagues about the channel! :-)
As a student. I really love to watch your video which has good quality content. I love to follow your youtube content with my studying and investing career.
Wow, thank you!!! Please share the channel with fellow students. Speaking for myself, I learn most from approaching concepts in a real world setting, that's why I enjoy making the finance case studies videos (about real companies that you have certainly heard of!) so much: ruclips.net/video/ya7rRZJCLEc/видео.html I think the balance sheet comparison Google vs Facebook might be useful for you!
My schoolteacher is just so boring and after multiple lessons I still didn’t get this, but now after watching this video it’s finally more clear! Thanks! 👍🏼
Wonderful to hear that! I have similar videos explaining the income statement ruclips.net/video/Hq-44PHgAiU/видео.html and cash flow statement ruclips.net/video/mZBjsIYrLvM/видео.html
Thanks! This helps me a lot for school
@@CrispyTM Great! Please spread the word to your fellow students. :-)
There teaching you this at school?
@@sonyvalencia yes
Thank you mate. Better understanding than when I got here😂
You're welcome! More examples of walking through balance sheets of real world companies in this playlist: ruclips.net/video/ya7rRZJCLEc/видео.html
I like the title of your channel! I also like the conceptual foundation you lay first and then the actual use of the concepts using examples. Thanks. :)) Keep Smiling
Thank you very much, Nandish! That's exactly what I try to aim for. :-) Best to learn about these concepts when you can also see how to apply them!
Hi, I've had a problem finding information about this, I do not fully understand the Equity section of the balance sheet.
Equity is what would be left (theoretically) if the company paid back all its liabilities, but what does equity concretely mean?
If the company has 80bln of Retained Earnings does it mean that the company has 80 bln cash sitting there belonging to shareholders and so they can't use it to finance their operations? I fail to understand what Equity practically amounts to, are the figures in the balance sheet just theoretical and in practice there isn't anything physical rappresenting Equity if not the difference between Assets and Liabilities? Thank you so much
Ciao Alessandro! I have some answers for you in the form of two videos: "What is equity" ruclips.net/video/Q1z395u60xU/видео.html and "Balance sheet and income statement relationship" (how a company gets started, business steps and financial steps, how equity is an element of it) ruclips.net/video/wZdaVEX41WQ/видео.html Let me know if these help to clarify!
Alessandr
I love your videos. They're so clear and to the point. I've been looking into getting a bit of know how of how finance and money works and your videos have helped me a lot.
Happy to hear that, Hamza! I think this video covering 5 big ideas might be helpful for you as well: ruclips.net/video/iR7b2NjgAO8/видео.html
Bravo I have done to watch all video for this session. It is very interesting. Thanks so much my Professor
Glad to hear that, Sidiki! Please spread the word. 🙂
U make it look so easy, thanks
Thank you, Tessy! In my view, the best way to learn how to read and analyze financial statements, is to go through lots of them, maybe my finance case studies playlist can help: ruclips.net/video/PI9X5Ybek_E/видео.html Plenty of balance sheets, income statements and cash flow statements being reviewed in there! ;-)
Excellent content, very useful and easy to understand, thank you :)
So happy to hear that, Taina! Please subscribe to the channel, and happy watching!!! :-)
Thank you is not enough! .. I am in love with your content.
Wow, thank you, Batool! Please spread the word about the channel.
Brilliantly explained!
Glad you think so! More financial statement case studies of real world companies in this playlist: ruclips.net/video/PI9X5Ybek_E/видео.html
You are a lifesaver. Thank you!!!
Glad it helped! I have videos going into specific accounts on the balance sheet as well: ruclips.net/video/5bWodpqRSYU/видео.html
very usefull thanks for your kindness sharing
My pleasure!!! :-)
Very simple! Thanks!
You're welcome! Some more real life examples of the balance sheet and other financial statements in this playlist: ruclips.net/video/ya7rRZJCLEc/видео.html
Very helpful video, thanks
Nice to hear that!!! I have more examples of each of the financial statements in my finance case studies playlist: ruclips.net/video/PI9X5Ybek_E/видео.html
Wonderful Presentation. Thank you.
Thank you! Are you watching the cash flow statement tutorial next?
@@TheFinanceStoryteller Yes, also thanks for your teaching. Very Practical.
Great explanation thanks. Will be watching a lot of your content over the coming months to help study this subject. I couldn't find any content though going into more depth explaining why the balance sheet needs to be equal?
Welcome to the channel!!! More case studies of the financial statements in this playlist: ruclips.net/video/PI9X5Ybek_E/видео.html
The balance sheet needs to balance due to a concept called the accounting equation: ruclips.net/video/OYql7Y9NnBg/видео.html
And once you understand the interaction between income statement and balance sheet, things start to fall into place ;-) ruclips.net/video/wZdaVEX41WQ/видео.html
Thank you for this video 🙏
Happy to help! Even though there are large similarities, every balance sheet has its own peculiar elements. Have a look at the balance sheet of Apple ruclips.net/video/J_1F8GoLOI8/видео.html and/or Tesla ruclips.net/video/4xT5JzEPHtw/видео.html to learn more.
@@TheFinanceStoryteller😅
Thank you for very informative content, can you furnish on the balance sheet of a church
Hello Cyndar! I have no experience in the area of balance sheets of churches, so cannot help you there.
Subscribed. You’re gonna do really well, friend. Remember that I predicted it here. 👍🏻
Hahahaha! Thank you, Pradeep! I have noted the date and time of your prediction. Please tell all your friends, family, neighbours, etc. about the channel so I can grow to 100K subscribers as soon as possible. ;-) Oh, and make sure to watch my related finance case studies in this playlist: ruclips.net/video/PI9X5Ybek_E/видео.html
The Finance Storyteller I will definitely watch all your videos. The thing is that there’s a whole bunch of young people just getting into finance and videos like yours cut through the crap and simplify things and deliver information effectively. Its my first time here but you’ll definitely see a lot more of me hehe as long as I find the time 👍🏻👍🏻
Thank you, that is a wonderful description! Yes, I base my videos on real life experience of working in finance for many years, and then working with audiences of business people (most of them without a finance background) to help them make sense of financial statements, financial concepts, etc.
I just do not understnad. why do the both sides of the balance sheet have to be the same amount? What if assets are more? whats is wrong with it? how
can u guranntee that a company always has the same amount ton the both sides
Hi Ketitammo! Nice to hear from you. Yes, the balance sheet always has to balance. Assets equal liabilities plus equity, see the accounting equation: ruclips.net/video/OYql7Y9NnBg/видео.html If assets grow quicker than liabilities during the year, that would mean that the company is profitable, and at the end of the year that profit gets added to equity, and once again the balance sheet balances. Take a look at my video on the relationship between balance sheet and income statement for an example: ruclips.net/video/wZdaVEX41WQ/видео.html Hope that helps!
@@TheFinanceStoryteller thank you so much for answering. I have subscribed your channel and am watching ally he videos
One more question- balance sheet is like a snapshot for the given moment, right? I understand that in December of the year, the profit goes to the equity. But in the moment X, when I took the snapshot what could my assets CANNOT be more than liabilities?
Or does it work like this - we have liability XX, as soon as assets are XX+1, that "1" will be sent to equity account?
Good thinking, but you are missing a small piece of the puzzle. During an accounting period (let's say the month of December per your example), the general ledger is open for journal entries. Those journal entries could either affect what is called permanent accounts or temporary accounts. During the month, the finance and accounting team normally does not produce any balance sheet. We might look at individual balances in the subledger or general ledger, to see if business results are progressing in line with expectations, but we don't "close" the period yet. Only when the accounting period is closed, do we add the profit for the period to equity (or subtract the loss for the period from equity). So you could say that during the accounting period, the "in progress" balance sheet does not balance, but the difference is explained by the total amount of the "in progress" income statement. Maybe my video on closing entries in accounting might help: ruclips.net/video/CXiKLtb7tqI/видео.html or the one on retained earnings ruclips.net/video/xiwQh5E7JWQ/видео.html
if the right side of the balance sheet is what you owe, then why do you owe your own equity?
The company is an entity, the shareholder is a separate entity. The company owes the shareholder capital to the shareholder. For more, see my video called "What is equity": ruclips.net/video/Q1z395u60xU/видео.html
Great work.
Thank you! I have recently done a deep dive on the latest balance sheet of Apple ruclips.net/video/J_1F8GoLOI8/видео.html and Tesla ruclips.net/video/4xT5JzEPHtw/видео.html as well. Some very interesting findings there!!!
Hi! A nice perspective on applying Walmart to the analysis when explaining the balance sheet. If interested I just made a deep dive into the consolidated balance sheet of Apple 2022 /Best regards KME
Greetings from the Netherlands to Sweden! Wishing you lots of success with your channel. I have done a few videos on Apple as well over the years, it's a company that a lot of people know and are interested in.
@@TheFinanceStoryteller Thank you, and back at you! Oh alright, nice. Ye I guess there might be a few of them, geat company :)
Hi, I am currently looking at a companies balance sheet as I was following your video. When I came to the section that has "retained earnings" it was in "-" what does this mean? As my understanding from your video is that this is the retained earnings made from the companies previous profit made that has not been paid to its shareholders. Thus, if this figure is in minus does it mean the same as above? As I did not se a "-" symbol in Walmarts example. Great Video! Hope the question makes sense.
Hello Lex! Retained earnings can be a positive number, or a negative number. In case it is a negative number, you could call it accumulated deficit. See for example the Tesla balance sheet of year end 2019. Accumulated deficit is the sum of the historical losses from the income statement. Walmart's retained earnings are a very high positive number, as they have been profitable for many years, and have only paid out part of those profits in dividend. More on retained earnings in the video of that name on my channel: ruclips.net/video/xiwQh5E7JWQ/видео.html
Why does the final value of what you own and what owe is the same? Can a company have more what they own than owe?
Hello Laura! The balance sheet is a picture at a point in time, while the income statement is more like a movie of what happened during the period. If a company is profitable (revenue exceeds expenses), then assets grow quicker than liabilities, and the difference between those numbers gets added to equity. Have a look at my video on the relationship between income statement and balance sheet to see how that works: ruclips.net/video/wZdaVEX41WQ/видео.html Or for a more "technical" accounting discussion of the same point, either ruclips.net/video/CXiKLtb7tqI/видео.html or ruclips.net/video/n-lCd3TZA8M/видео.html
Thank you so much!
You're welcome! I have more videos on balance sheet, income statement and cash flow statement in this playlist: ruclips.net/video/PI9X5Ybek_E/видео.html
thank you
brilliant video! thank you for this
You're welcome, Raj! I have more finance case studies in this playlist, including walk-through of each financial statement: ruclips.net/video/PI9X5Ybek_E/видео.html
Thank you for great video.I could not understand one thing that, do countries owe to wallmart in taxes in reveviable form?
Hello Elbay! Well spotted. This is a very unusual thing. Normally companies have "taxes payable" on the liabilities side of the balance sheet (if the income has been earned, but taxes have not been paid in cash yet). If there are receivables from the government for income taxes, then it could be that Walmart overpaid in the past, and is waiting for a repayment that is due to them. Unfortunately, we don't get an overview of exactly how much money is specifically related to governments, just that the total receivables (from customers, insurance companies, banks, suppliers, government) net were $2.9 billion.
@@TheFinanceStoryteller Thank you master! I got that.
can you help me understand why retained earnings is in equity’s section? I thought I should be in cash or other asset classes
If a company is profitable, then its assets are growing quicker than its liabilities. To counterbalance that, we have retained earnings as part of equity. Per the accounting equation assets = liabilities + equity.
For an example of how retained earnings occur (at the end of the year, when you need to add/subtract the result of the income statement to equity in order for the balance sheet to balance), see ruclips.net/video/wZdaVEX41WQ/видео.html
This video specifically discusses retained earnings ruclips.net/video/xiwQh5E7JWQ/видео.html
What if the total on liabilities side is more than the total on assets side when the company has more debt than it's assets value??is there any possibility of this??
Hello Kirthik! Yes, that is certainly possible. It would mean that the company is in a poor financial state. My video on solvency and liquidity discusses this situation: ruclips.net/video/z4zrQ3saMsI/видео.html
Thank you for Sir video
Most welcome!
Thank youuu! Now I understand
That is wonderful to her, Sheena!!! Here's another balance sheet case study: ruclips.net/video/XKSOswE-_6c/видео.html and one about the income statement: ruclips.net/video/Hq-44PHgAiU/видео.html and one about the cash flow statement: ruclips.net/video/mZBjsIYrLvM/видео.html 😎
@@TheFinanceStoryteller aww thank you for that. But, how about financial ratios and measurements?
Got you covered there as well: ruclips.net/video/MTq7HuvoGck/видео.html
Thank you ❤
Happy to help!!!!
@@TheFinanceStoryteller I have a presentation today and I am responsible for the balance sheet ❤️
Good timing to watch the video then! I can recommend a 5-minute related video that shows how the income statement and balance sheet interact ruclips.net/video/wZdaVEX41WQ/видео.html and a playlist covering various accounts on the balance sheet in more detail (as well as walking through more real world balance sheets like those of Apple and Tesla) ruclips.net/video/J_1F8GoLOI8/видео.html&pp=gAQBiAQB Enjoy! Wishing you all the best with your presentation.
Thanks
Great video however do u have a version that is in plain English (not using complex accounting jargon?)
Ex: 1:48 you say “Book value of the shareholders capital”, so therefore what is book value, and what is shareholder capital. The thing I’m finding confusing is all the videos use accounting jargon and not plain English.
Hi! I can point you to related videos to explain those. Book value vs market value ruclips.net/video/uCs9AyGIb3c/видео.html What is equity ruclips.net/video/Q1z395u60xU/видео.html
Many thanks
You are welcome! :-) I have similar videos on the income statement ruclips.net/video/Hq-44PHgAiU/видео.html and the cash flow statement ruclips.net/video/mZBjsIYrLvM/видео.html as well, these could also be helpful for you.
Why is retained earnings a liability? And if goodwill changes what changes in liabilities to balance it? Thanks.
Hi Carley! Retained earnings is not a liability, it is part of equity: ruclips.net/video/xiwQh5E7JWQ/видео.html For goodwill, I have a specific video as well: ruclips.net/video/yq9qjCmUfS4/видео.html Basically, goodwill gets onto the balance sheet as an asset as part of an acquisition, for example debit net assets acquired $2B debit goodwill $1B credit cash $3B (in the books of the acquiring entity). In case of a goodwill impairment, the company books debit impairment expense (in the income statement) $1B, credit goodwill (balance sheet). This impairment loss is then deducted from equity when the balance sheet is put together. Hope that helps! Let me know if you have any other questions.
Can you make a video on ratios which are not familiar but there is a huge hidden carrying value.
Hello Jagadeesh! Sure, that is worth researching. Shout a few video titles to me, and I will check what I can do.
Thanks 😊
Welcome 😊
kindly anyone can tell me that what is the difference between non-controlling interest and preferred stockholder?
As far as I have experience with it (which is limited), non-controlling interests tend to come into existence during an acquisition (of less than 100% of the acquired company). See the case study of Walmart buying 81% of the outstanding shares of Flipkart: ruclips.net/video/wneoAaNZv8E/видео.html Preferred stock can be issued "by itself" in a public offering. For example, take a look at the Boston Scientific 2020 annual report. On May 27, 2020, Boston Scientific completed an offering of 10,062,500 shares of 5.50% Mandatory Convertible Preferred Stock (MCPS).
@@TheFinanceStoryteller Thanks a lot sir!
@@crazymonster6317 Happy to help!
Hi Finance Storyteller in your Walmart balance sheet explanation at 5:14 , you mentioned ' .... in terms of the amounts, the lease are pretty much offset by the short-term lease obligations & long-term lease obligations'. What could be a narrative or (real) reasons for the operating lease in the asset 17,424 and operating lease in the liabilities 1,793 + 16,171 = 17,964 , not equal? The same question for finance lease 4,417 and 4,818 ? Well, as a newbie i thought all those add ups must all come out equal. Do they have anything related to 'net impact on the balance sheet .. zero'? Help me understand please :)
Hello Yenny! On the balance sheet, a lessee is required to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments. I would guess that this lease liability is bigger than the lease asset due to the financing component (interest). If you want to know more, I would suggest for you to study new leasing standard ASC 842 (US GAAP) or IFRS 15 (IFRS).
@@TheFinanceStoryteller thx a lot 🙌
Good job
Thanks :-)
I have videos on the income statement and the cash flow statement as well, if you are interested! ruclips.net/video/ToE-oggQiqQ/видео.html
need your help for my bm paper
I can help you point at some videos that might be useful....
@@TheFinanceStoryteller exam is in 8 hrs lol
Wishing you lots of success, or if you have already taken it, hope it went well!
Useful video 👍 But subtitles blocking the content on the screen. How do I get rid of it?
Press the "cc" icon on the bottom right of the screen (next to the "settings" and "full screen" icons), and you can switch subtitles on or off.
Hello sir As a first time investor what is the important line i need to see in the balance sheet ?
Hello Sanjay! It's not necessarily about any individual line, but more about the "composition" of the balance sheet in total. See my side-by-side comparison of the balance sheets of two competing companies: Google vs Facebook ruclips.net/video/ya7rRZJCLEc/видео.html
@@TheFinanceStoryteller ok sir👍🏻
May I ask what the book value means?
Hi Yilma! In the video, I discuss the book value of the shareholder capital, which is equity on the balance sheet. You could also talk about "book value of the inventory", or the "book value of a machine", but let's stick to book value of equity for now. Book value, or accounting value, is based on a company’s historical financial results, looking back. You use a company’s latest balance sheet to come up with the book value of the equity, you look up the number of shares outstanding (which is usually mentioned in the earnings per share calculation in the income statement), and when you divide the two numbers you get the book value per share. More discussion and explanation in my video called book value vs market value ruclips.net/video/uCs9AyGIb3c/видео.html
if the total number of liabilities is bigger than assets total number this means that the company is near on bankruptcy ?
Good question! It certainly would not be a good thing for equity to be negative. Per the accounting equation assets = liabilities + equity ruclips.net/video/OYql7Y9NnBg/видео.html Negative equity does not immediately mean bankruptcy, as there could be "technical" accounting factors causing that (like currency translation adjustment), but it is certainly a big concern. Bankruptcy only occurs if a company is unable to pay its creditors and somebody takes the company to court to demand payment (getting the company declared bankrupt may be a step in that).
@@TheFinanceStoryteller thanks for the quick reply. your channel is awesome.
Thank you! Please subscribe, and share the channel with friends and colleagues!
If company have assets that is trades in open markets (stocks) how that frequently change price reflects on BALANCE SHEET?
As a price snapshot of each quarter report?
Does company obligated to mention those prices on any other reports for a public?
Hi Dmitry! That depends on what type of company you are looking at (bank, insurance company, manufacturing). This is an area called accounting based on historical cost (where companies might have unrealized gains "hidden" in the assets on their balance sheet), versus fair value accounting (where companies constantly adjust for latest market price of assets). And then the second question is whether any gains/losses are recognized in net income, or through other comprehensive income: ruclips.net/video/f4-2f7T4rp8/видео.html
TY!!!
You're welcome! More of these case studies in my finance case studies list. Here's a side-by-side comparison of the balance sheets of Facebook and Google: ruclips.net/video/ya7rRZJCLEc/видео.html
Sir where are you going to put the amount of the debt that you already paid?
That lowers the amount of outstanding debt. On the balance sheet, you are looking at the net amount (original amount borrowed minus what has been repaid so far).
Thanks for the response sir!
@@powzey259 You're welcome! That's one of the best part of making RUclips videos: answering questions and interacting with viewers! :-)
In addition to my previous answer: in the cash flow statement, a repayment of debt is shown as a cash outflow in the Cash From Financing Activities (CFFA) section, as repaying debt is a use of cash. See ruclips.net/video/mZBjsIYrLvM/видео.html and/or ruclips.net/video/xw67FIeVsj8/видео.html
when we reviewed AP or AR in Balance sheet，that amounts showing is year to date value？Please advice. Thanks
Hi Jessie! I would talk about year-to-date in the case of income statement accounts (revenue May year-to-date, COGS May year-to-date). For balance sheet accounts like AP and AR (also called "permanent accounts"), you are always looking at the current balance "at a point in time"(assuming all transactions have been properly recorded).
Would a directors loan account go in equity or in non current liabilities ?
I assume that the company is borrowing money from the director, hence a liability for the company. Either current liabilities (if it is to be paid back within 1 year) or non-current liabilities (for a long term loan).
so the property and equipment is listed as long term debt given that it has a use life of 30-40 years?
Long term asset. It is something the company owns.
Thick dutch accent but very well explained:)
Ja ja ja. ;-) Thanks for the compliment.
@@TheFinanceStoryteller geen probleem
Really good video!
Thank you very much!
Why dose Walmart equal out their balance sheet and not try to make more then they owe?
Hello! The balance sheet has to balance by definition. What we own (assets) on the left, has to be equal to what we owe (liabilities and equity) on the right. See also my video on the accounting equation: ruclips.net/video/OYql7Y9NnBg/видео.html What Walmart (and pretty much every other company) does try to do, is be profitable.... In that case, your assets grow quicker than your liabilities, and your equity goes up. The balance sheet still balances, but on the right hand side, the equity gets bigger in comparison to the liabilities. Take a look at my video on the relationship between income statement and balance sheet to understand the interactions: ruclips.net/video/wZdaVEX41WQ/видео.html Hope this helps!
@@TheFinanceStoryteller oh I see. I see yes. The equity makes for the difference in the end really cause your paying those people back at a higher percentage....Is that right?
Almost right, you are getting there! If a company is profitable, then equity (the book value of the shareholder capital) grows and grows, until the point where the company pays out dividends to those shareholders (which make cash go down on the assets side, and make equity go down as well). The income statement looks at the "flow" of profitability during the year, the balance sheet is the picture at a point in time (year end).
@@TheFinanceStoryteller Ok I see, I’ll get there and thank you for your help.
Happy to help! Let me know if you have any follow-up questions.
what is the difference between notes payable and accounts payable i am taking a financial accounting class and i am confused
Notes payable are liabilities that indicate the money a company owes its financiers (banks, etc.), while accounts payable are liabilities to suppliers.
@@TheFinanceStoryteller thank you so much ❤
@@abby-cv4xc Enjoy your financial accounting class. Even if it seems cryptic or confusing at times.... keep going! Many of the terms you might need are covered in this playlist (beginners) ruclips.net/video/b93KBmcXanI/видео.html or this one (intermediate) ruclips.net/video/lBvnSgIGVnU/видео.html Please spread the word!
Hey there, I needed to make a balance sheet for a project but it is not balanced. What are common mistakes? Btw, tnx for the vid
Hi Wouter! Did you add the net income you expect during the year to the equity balance at the end of the year (or in the case of making a loss, deduct it from equity)? Here's a video explaining the accounting equation (assets = liabilities + equity) that might help: ruclips.net/video/OYql7Y9NnBg/видео.html And another one on the relationship between income statement and balance sheet ruclips.net/video/wZdaVEX41WQ/видео.html
I will have a look, thank you very much
I have a question about the "long term debt due within one year" how is it payed on 6:54.
Is this payed on the year 2020 or is it due to be payed on year 2021 ?
Hi! Within 12 months of the balance sheet date. As the fiscal year of Walmart ends on January 31st, in this case it meant anywhere between February 1st 2020 and January 31st 2021, in other words during what they define as their fiscal year 2021. If you download the Walmart annual report, you will find additional information on specific amounts, types of loan, and interest rates of various loans in Note 6. Short-term Borrowings and Long-term Debt.
@@TheFinanceStoryteller thank you so much, this help alot !
@@Aerides67 Please subscribe, and spread the word about the channel! :-)
Where do retained profits sit in accounting documents? They are not contained in the Balance Sheet, is that right? Are they accounted for in the Income Statement?
Yes, they are in the balance sheet, as part of equity. When a company makes a profit (in the income statement) during the year, then at the end of the year when you put together the balance sheet for December 31st you add those profits to retained earnings (a category within equity). See my video on the relationship between income statement and balance sheet: ruclips.net/video/wZdaVEX41WQ/видео.html or the video on the statement of changes in equity ruclips.net/video/x3bjr3JPedE/видео.html
@@TheFinanceStoryteller such a great help, thank you.
I had a red flag for buying Verizon "short-term liabilities ($51.40B) exceed its short-term assets ($37.39B)" Can you share me your opinion?
I will take a look! Which balance sheet are we talking about? Q4 2022? Q2 2023? Q3 2023?
@TheFinanceStoryteller I do not know, I use Wallstreenzen. Thank you fue replying. I am trying to build a long term dividend portafolio.
I always go directly to the Investor Relations section of the company's website and look up the latest financial results. Q3 2023 was published today. I have been an investor in Verizon for a long time, and based on the data I reviewed today, I will hold on to those shares (though not buying any additional ones).
My analysis:
Slight decline in revenue and operating income versus the same period of the prior year. More than 50% increase in interest expense VPY, as the company is highly leveraged and interest rates are rising. Still a very good net income generator of ~$5B per quarter. As you mentioned, current liabilities of $55.7B are indeed higher than current assets of $38.2B. Not necessarily a big problem. Long term debt has decreased from $140.7B at YE2022 to $134.4B at Q3. That's still a lot in absolute terms and makes Verizon fragile if the interest rates continue to increase. Equity is $99B (and growing) out of a balance sheet total of $385B, so they are moving in the right direction. Quarterly dividend of $0.6650 is more than half of the diluted EPS of $1.13, which is high but doable. Free cash flow year-to-date was $14.6 billion, an increase from $12.4 billion in 2022. For total year 2023, Free cash flow should be above $18 billion, a $1 billion increase from the previously issued guidance.
Hope this helps!!! Cash flow statement is the most important to review in this kind of company. To calculate total returns on Verizon stock, have a look at this video: ruclips.net/video/TYzGGOk-8kE/видео.html And yes, I do wish I had sold the shares at their peak. ;-)
@@TheFinanceStoryteller Thank you for your answer. Do you have a website/forum/community where we (your followers) can discuss things like this. I am a business owner and I am trying to learn more about investing.
@@eddiechristianaguilarkleim7599 Thank you for the suggestion! I took a few days to think about it, and decided I don't want to go in that direction, as I do not want to give the impression that I am giving investment advice (I am not!), and don't want to spend the time moderation conversations (I prefer to spend my time on making new videos and responding to questions like yours). If it helps, I do have a playlist with videos around investing (most important are the traps you shouldn't fall into): ruclips.net/video/K4mWd2zBYVk/видео.html&pp=gAQBiAQB One of the videos in that list is "What is an ETF", where I disclose my own stock market portfolio (just for reference, I wouldn't suggest to replicate it!). The great thing is when a stock goes 10X, but those are very rare.
Thankyou 😁
You’re welcome 😊
If assets or liability not equal how to find error???
Hi Muhammad! Maybe my videos on the accounting equation ruclips.net/video/OYql7Y9NnBg/видео.html and the one on suspense accounts ruclips.net/video/7_CBmXcJE2Y/видео.html can help you here....
Where I can find the Balance Sheet of a company?
Depends on the type of company you are looking at. For companies that are publicly listed on the stock market, you can download the financial statements (including the balance sheet) from the investor relations section of its website.
Am still confused because wat I am learning and wat am seeing is different
Maybe going through a few more examples (balance sheet of Apple and Tesla) will help: ruclips.net/video/J_1F8GoLOI8/видео.html&pp=gAQBiAQB
Also, remember that these videos are written from the American/European perspective. The Brits sometimes use net assets (total assets minus liabilities) on the left, and then just equity on the right. And the system in India is different altogether.
2:40 I do not know why Equity is a liability.
It's not. Equity is a separate category. Assets = $236.5B. Liabilities + Equity = $236.5B. Total liabilities is $154.9B and equity is $81.6B.
Why is equity a liability?
It isn't. Start with understanding the accounting equation, and you will get the interrelationships: ruclips.net/video/OYql7Y9NnBg/видео.html
What are off balance sheet liabilities & why they are not displayed on the balance sheet? What are the examples of off balance sheet liabilities?
Take a look at section ruclips.net/video/eIjCaeNm-Vk/видео.html of the video. In the past (prior to the introduction of the new leasing standard ASC 842 in US GAAP and IFRS16), most leases were off-balance sheet. As the equipment or buildings did not meet the criteria of being an asset, neither the asset nor the related liability were recorded on the balance sheet, hence "understating" the length of the balance sheet on left and right. I think it's a great thing that this is now "fixed", showing a more complete picture of a company's financial position.
Another thought.... there have been cases of accounting misstatements, where the company wanted to show a more favorable debt-to-equity ratio. These involved selling assets just before the end of the quarter or year, using the proceeds to pay down debt, and buying back the assets early in the next period (financed once again by loans). See also: Enron documentary "the smartest guys in the room", section Nigerian oil tanker scam. That's taking "off balance sheet" a few steps too far...
I still don't understand but I like your voice 😊
Hello, what will be OE in this case ?
Hi! Not sure what you mean with "OE"? Please clarify, and I will try to answer.
✨❤
Wtf..I just CAN'TTT DO ACCOUNTING. I study my ass off and still get 20%.
Accounting isn't for me..
Sorry to hear that! I hope you will keep trying by using various approaches to understanding the topic. Maybe start with the very basics like the accounting equation, debits and credits, double entry accounting, and then take it from there? Here's a playlist covering those accounting topics: ruclips.net/video/b93KBmcXanI/видео.html
Well that was me too, you just need to practice it everyday and get used to it.Think of accounting as gaming.When you first start it you’re like a noob.And when you keep playing everyday you get improved day by day and finally you’re a pro.Imply that on accounts and practically everything, and don’t lose hope.Failures gives us more experience than victories 😁
Poland, Great.
Poland? 🤔
The 1.8b in deferred income tax though Flipkart.....ye? If that was us, the bailiffs will be here with a pick up truck 😑 Oh, how the rich get away with so much.
Deferred means postponed, they will still have to pay those taxes some day. I recently made a follow-up video specifically on deferred tax liabilities. These apply to businesses big and small, and mostly occur when governments try to provide an incentive for businesses to invest. If you want to know more, here's the link: ruclips.net/video/wom7IBNnXM8/видео.html
@@TheFinanceStoryteller thank you, I’ll check all your links out.
P :D
Ohh bat ka nanonood dito? Di mo naintindihan turo Ng teacher mo no... Ahahahaha ok Lang Yan.. same
Ooo now I understood thank you 😅😊
Nice to hear that! To learn how financial statements like the balance sheet work, go through a lot of them (from the real world!). I have walk-throughs for Apple, Tesla and others in this playlist: ruclips.net/video/J_1F8GoLOI8/видео.html&pp=gAQBiAQB
thank you
You're welcome