Analysis Of Ford Motor Companys Balance Sheet Assignment

Analysis Of Ford Motor Companys Balance Sheet - Assignment Example   Equity refers to the difference between total assets and total liabilities (Fridson et al 2011).  Purpose of the balance sheet  The main purpose behind the preparation of financial statements is to allow major decision makers to assess the present condition of the company and make changes as needed. Balance sheet, therefore, gives users an idea of the company's financial position along with presenting what the company owes and owns. It also indicates how the economic resources contribute by shareholders and lenders are used in the business. It helps investors to determine the financial standing of a company (Fridson et al 2011).  Creditors and banks use the balance sheet to make decisions on loans to be extended to the company. Also, stock investors use the statement of financial position to uncover whether the business represents a good investment. Balance sheet indicates trouble areas for the company such as back taxes owed or chronic late payment fees for bills (Peterson & Fabozzi, 2012).   How it reflects the company’s financial status  Statement of financial position often sums up the liabilities, assets and the owners' capital as a specified point in time. Analysis and review of the balance sheet show the current financial health of a company. Subtracting total liabilities from total assets results into stockholders' equity, this is the net worth of the company. Balance sheet, therefore, shows the value of the company (Ittelson, 2009).