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Entrepreneur Financial Management Series (2).

In a follow-up to what we started in the first series of the “Financial Management Series for Entrepreneurs” and the success they have achieved, we have taken upon ourselves

Complete the series, seeking to deliver the most important fundamentals and concepts of financial management to entrepreneurs in a simple way, and we try to bridge the distance

between them and between financial management, There is no doubt that one of the most important of these fundamentals is the financial statements that we have explained in the previous article, one of and

It is the income statement (profits and losses).

Today we will explain the list of financial position “balance sheet”.

According to modern international standards, the official title of this list is the Financial Center List, and we will introduce entrepreneurs to their connotations The extent of the importance of its information for the company and for external parties, which could be a bank, partner, government or Other than that, we will enumerate the most important basic items in it.

Statement of financial position :

It shows the financial position of the company at a certain (previous) moment from the assets (the company’s properties), liabilities (obligations on the company), and the rights of the partners.

And hence the book value of the company.

Before going into the details of this list, some points must be taken into consideration:

  1. The balance sheet (balance sheet) shows the historical value of the assets which could very well be different from the value Market such as land and real estate.

  2. The information in this list is from a previous date, meaning that the numbers may have differed significantly at the date of reading.

  3. Some of the risks facing the company do not appear: such as the lawsuits filed against the company that have not yet been finally decided upon.

  4. Some numbers shown in this list are based on my estimates, such as dues for expenses for which no invoices have yet been received.

  5. Do not explicitly display some of the risk of non-collection of debts from customers.

Therefore, the entrepreneur/investor must not make a decision based on this list only, but on all other lists and strive to obtain additional operational information.

List of financial positions on December 31, 2018

For example: upon requesting the financial department to report the income statement, the period from – to, the income statement for the month of September must be determined The period from 9/30 to 9/30.

Whereas when requesting the financial position list, a specific date must be specified (the end of a month/quarter/year), such as if the financial position list is requested until the end of a month September is the period from the start of work (the project) to 9/30.

This list shows the value of the assets of (the company’s property) in terms of tangible and intangible assets, i.e. what it owns in terms of cash, inventory, and receipt notes, and in return Also, it shows the obligations of the company to others, the equity obligations (capital and partners’ rights) and retained earnings Not distributed to partners to date.

The importance of this list is:

It indicates the value of the company’s assets, which is essential information for lenders in the event that the company is in the process of requesting a loan from the bank or an entity Funded to ensure loan recovery.

It indicates the degree of liquidity of the company (cash, customer debt, and inventory relative to suppliers’ urgent debt).

The extent of the company’s readiness for any urgent changes, such as delayed payments by customers or the existence of an investment opportunity in need of quick liquidity.

The ability of the company to pay off long-term and short-term debts and measure credit risk.

It consists of two parties:

1 – The asset party, which is the assets, that is, everything the company owns, whether in cash or in kind, or the rights it has with others.

2- Liabilities party: that is, all the obligations of the company to others, whether suppliers, lenders, due taxes, and the rights of partners represented by rights Property.

The most important terms in the budget (list of financial position):

Assets are divided into current and non-current assets:

Current Assets:

They are assets that have a short-term nature, that is, will turn into liquidity within a short period of time, which may be a fiscal year or according to the cycle Operational of the company.


  1. Cash and bank accounts: What the company has in terms of cash or what is in its current accounts in banks.

  2. Bills of exchange: Receipts, which are bonds that can be routinely and quickly payable to the company.

  3. Accounts receivable: are the company’s assets with customers and clients and are the result of selling goods or providing services to customers.

  4. Inventory: represents the value of finished products for sale, semi-finished products, and even raw materials. They are here at a cost price The company.

  5. Prepaid expenses: It is what was paid as an expense for future periods, meaning it includes future periods after the date of preparing the financial position The most common example is the annual rent paid in advance.

Long-term assets: are the assets that the company aims to acquire, keep, or conduct business from

During it and not for the purpose of selling it, perhaps the most important types:

  1. Fixed assets: the value of what the company owns in terms of land, buildings, and cars.

  2. Intangible assets: do not represent a real thing and have significance in the continuity of the activity. Copyright.

Second – Obligations: Include:

Current Obligations: debts owed by the company that must be paid within a short period of time and are linked to completion The operational process, such as the bank’s debts, i.e. the amount to be paid to the banks during the period, the payable salaries, and the taxes owed to them previous period.

Long-term obligations: The company’s obligations are expected to be paid within a period exceeding the financial period That is often more than a year.

Long-term loans, treasury bonds.

Second – Property Rights: They represent the rights of employers and their components:

1 – Capital, which is the amount agreed upon to be the capital of a company, and it is the main financier of the work and is often distributed among partners according The percentage of his participation and the changes taking place in the capital appear here within the equity.

It differs as the company is a joint stock, so the capital becomes the sum of the shares multiplied by the value of each share.

2 – The net result of the year, i.e. the net income statement, When it is a profit, the profit is collected into the capital, and vice versa in the case of loss.

The following are some points of difference between an accountant and an entrepreneur when reading the financial statements:

Ghazi Al Mahaini CMA-CFM


Financial Services Company – Turkey.

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