Understanding Financial Statements Bizzer Professional Training

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The Balance Sheet – Order of Listing
Items on a balance sheet are listed in order of liquidity. Liquidity takes on a slightly different meaning for assets and for claims on assets. For assets, liquidity means nearness to cash. For this reason cash is the first item on the balance sheet.

After cash, the other current assets are listed in order of liquidity. Marketable securities (which can be converted to cash by selling them), accounts receivable (which may be factored), and finally inventories make up the rest of the current assets. Inventories, which are considered current assets, are listed last because it is generally harder to convert to cash a half-finished item in production than it would a U.S. Treasury bond.

Following current assets come those assets that would take more time to convert to cash. Buildings, land, and equipment would all be considered long-term or fixed assets.

When ranking claims on assets, liquidity refers to how quickly the claim against the company matures. Short-term or current liabilities mature quickly. Intermediate, and then long-term liabilities would be listed next. Sometimes as longer-term liabilities move toward maturity, the portion that matures is moved into current liabilities.

Last on the claims portion of the balance sheet would be the equity accounts. For a corporation, the preferred stock accounts would be listed before common equity accounts. The last claimants on a company's assets are the common stockholders.


 Balance Sheet
 Bizzer, Inc.
January 1,1999 


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