The balance sheet tells what the business or person owns/ owes for a particular moment in time. It is the only one of four financial forms that shows the financial condition of a company or person in a moment of time. Like its name suggests, the balance sheet will always balance the business by what it owns/ owes. The assets equals liabilities plus net worth, and thus the financial form will always balance. This article will teach you to look between the assets and liabilities at the net worth, and find the revenue generated by sales.
Items you will need
- Balance sheet
Calculate sales revenue from your balance sheet
Determine the sales made in a trading period. Add up your stock and inventory of items.
Determine the number of items that were sold, separating the expenses of sales from this task. You do not want to calculate the expenses.
Take the two quantities and calculate the average price of items sold x the number of items sold. You now have the “turn over” for the business.
Look at the balance sheet where it states “Total Assets”. From the balance sheet you can determine what profits the business has without looking at its liabilities.
Utilize your profit and loss financial form with your balance sheet to determine the costs for doing sales. This can help you determine how and where you need improvement in sales.