A balance sheet offers an overview of a business’s financial status of a particular time. It tells you about the business’s assets, liabilities, and capital. The assets need to be equal to the total of the liabilities and the business’s equity from shareholders.

The purpose of a balance sheet is to identify the financial strength of the company (Also see The Balance Sheet and the Profit & Loss Account). It tells you how stable, financially, your company is. Regularly, you will discover yourself depending on the balance sheet when making a decision and in preparation of other financial statements.

What Are Assets?

Assets are the properties owned by your company. There are two classifications of assets: current assets and long-term assets. The cash in your company is described as the current asset due to high liquidity. Since machinery and other properties like real estates take a longer duration to liquidate, they are counted as long-term assets. Other examples of current assets are account receivables and cash on hand (Also see What Is Cash Flow?). These assets usually are transformed to cash in one fiscal year.

Fixed assets depreciate over time. For instance, machinery and buildings tend to lower in worth with time. Some assets, such as land increase its value with time. The typical types of fixed assets in a company are the machinery, vehicles and workplace equipment. None of these is easily convertible to cash within one fiscal year of the company.

What Are Total Assets?

The total assets of a company are when you add all the current and fixed assets your business owns. This is what you need to record and report on your balance sheet. The quantity you receive does not represent the current fair market price, but the purchase cost of the assets.

Owners’ Equity and Liabilities

Liabilities are the company’s obligations to the outside world. Owners’ equity is the amount when you deduct the debt quantity from the total assets. These liabilities and debts are to be paid in one year for short-term liabilities or after one year for long-lasting liabilities. For example, the debts from creditors and suppliers’ accounts, accrued wages, accounts payable, shareholders deposits and income account payable.

A balance sheet is a crucial financial statement that usually prepared by accounting firm in Singapore. The balance sheet reveals the business financial position at a specific time. Hence, you need to guarantee that it is made correctly, and you may look for any accounting services in Singapore for further guidance.

An investor needs to know how to analyse the investor ratios when assessing the financial statements of a company (Also see Getting Ready as An Ambitious Accountant). Investor ratios could be used to determine the health of a business as it can show whether it is a good investment or bad investment.

When a business makes profits, the directors have two options to manage these profits – to reinvest profits or pay dividends. Some investors are searching for development, whereas some investors are searching for a good yield. Some investors are willing to give up short-term profits as they desire to increase the share price to make profits. Below are a few investors ratio that you need to understand:

Earnings Per Share (EPS)

EPS = Net income-Preferred Dividends / Weighted Average Shares Outstanding

This ratio indicates that the profit shown in Profit and Loss that could be paid investors in theory. From EPS, we can determine whether the EPS of the business under consideration is constant, reducing or growing.

Earnings per share are simple to comprehend, and figures are available. However, a research study has revealed that there is a poor connection between shareholder value and earnings per share growth.

Dividend Per Share (DPS)

DPS = Annual Dividends / Weighted Average Shares Outstanding

Annual dividends consist of total dividends paid by an organisation in one year, including interim dividends but excluding special dividends.

Investors used DPS to evaluate various entities to invest in. However, DPS ratio might not show a complete image and position. Some companies might keep their profits for future investments, instead of paying dividends to current investors. By doing so, the company can boost the value of their shares and the general worth of the business.

Dividend Yield

Dividend Yield = Dividend Per Share / Current Share Price

This ratio shows the percentage return made by an investor regarding the company’s current share price. Investors would have an interest in the dividend yield as they desire returns or good yields from their investment. Dividend yield benefits the investors as it can be used as a comparison with other financial investment chances.

Dividend Cover

Dividend Cover = Profit After Tax – Preference Dividends / Dividends Paid

Dividend cover measures a company’s ability to pay dividends. It tells us how many times over the profits of a company could pay the dividends. For instance, if a company’s dividend cover is 3, this indicates that the company’s profit was thrice the number of dividends paid to shareholders. Usually, the objective of an organisation is to maintain a dividend cover of 2 to obtain enough funding from retained earnings and to offer a reasonable return to the shareholders.

There are lots of accounting service in Singapore you can seek help from if you need further assistance in understanding financial statement.

Lots of small company owners struggle with poor cash flow, which is caused by high unexpected costs, inadequate customer work and slow-paying customers (Also see Managing Accounts Receivable Could Save Business).

First of all, we need to understand that profit is the difference between expenses and revenue in the Profit and Loss Account. Hence, cash flow is not profit. It is possible for a business to be unprofitable but having positive cash flow and vice versa. For instance, when an entrepreneur deposits his or her cash into a bank account, which enhances cash flow but not profits.

Secondly, cash flow is not working capital, although cash flow and working capital are frequently used interchangeably. The difference is that working capital is the current assets minus the current liabilities. It is the money you can utilise in cash shortages.
Cash flow is the total amount of money streaming in and out of your business. You could have positive cash flow when more money is flowing in than out and your business would be in the black. Contrarily, when more money is flowing out than in, you would have negative cash flow which causes your business in the red. This is certainly something an accounting firm in Singapore can assist you.

Cash flow plays a vital role in:

Making better business choices

Understanding your cash flow helps you to decide. For example, you plan to purchase a brand-new laptop and you find that your earnings far exceed your expenditures at the end of the month. Since you have adequate money, you can make that purchase confidently. Contrarily, you might put that purchase on hold until your scenario improves if you are in the red. In both case, since you always track your cash flow, you have made a wise choice.

Keeping your business afloat

When paying the bills, you need to refer to cash flow to avoid running the risk of closing your doors. Your objective is to maintain positive cash flow and make sure that you always make more than you are investing.

Better money management

Knowing your cash flow assists you to comprehend how you handle your money and what business activities are resulting in boosts or reduces in cash flow. For instance, you found that you have profit come year-end but you have a hard time to cover the expenses every month. Therefore, knowing outflows and inflows helps to determine any issues so that you can solve the situation immediately.

Growing your company

A business requires adequate cash to reinvest—to invest in advertising, buy new equipment and office.

Seasonal businesses

Seasonal businesses generally have marked hectic and slow durations and unforeseeable cash flow. They need to thoroughly handle their cash flow year-round so that they have sufficient money to tide them over throughout the slow periods.

To gain more insight on cash flow statement, check out accounting service in Singapore.

Due to the fact that it is a method of communicating information to the financial elements of a business company, accounting is frequently known as a language of business. The financial statements are the foundation of accounting as it is the step to obtain a concept about the financial condition of a business. The significance of the financial statement in accounting services in Singapore for small companies is uncountable. Its effectiveness could not be specified in simply a couple of words. Specifically, it is an evaluation of the practicality, stability and success of a company entity.

What is a Financial Statement?

A financial statement is to record the financial functions of a company and it consists of elements like balance sheet and profit and loss. This record is kept by every company to make the financiers, lending institutions and company owner familiar with the financial health of the company. It is shown structurally (Also see What is a Chart of Account?) so that everyone could quickly comprehend and understand the problems. A financial statement or report shows crucial information relating to profitability, liquidity and solvency of a company.

Effectiveness of Financial Statement

The significance of the financial statement is tremendous as it offers pertinent details about the business and satisfies the requirements of the interested bodies such as management, lenders, financiers, the government and so on. The functions of a financial statement are listed below:

Management

In the competitive environment, a company would stop working if there is no innovative plan, method or strategy. A financial statement is an excellent aid to management in comprehending the present position of the company while understanding the current pattern of development and possibility of it. Thinking about these elements, they can make a crucial long-lasting business choice.

Creditors

Financial institutions such as a bank, analyse and evaluate the financial statement to understand the financial condition of the company and whether it has going concern issue. They also consider this element to assess the credit terms provide to the company.

Government

Remarkably, a financial statement could be practical to the local government and other regulatory authorities. These authorities evaluate this report through different taxes and use this criterion to handle capital concern and utility guideline.

Investors

Both potential and present investors, utilise financial statements to examine the present state of the financial of the business such as its worth or working capital usage (Also see Components of Working Capital). It is a crucial element in making crucial choices on financial investment.

In case you need, we also have partners providing accounting service in Johor Bahru and we are confident they can help you in your venture.

When choosing a career path, everyone would like to pick a career that not only matches their interests as well as fulfils their demands. If you are thinking about accounting, you might be a person who likes to perform calculations on a huge amount of numerical data.

Nevertheless, the assessment of an accountant would not be performing calculations only. You may compute Return on Investment (ROI) of your occupation option. Do you want to work in the leading accounting firms in Singapore or do you want to involve yourself in the industry? Which profession field in accounting fascinate you?

Here are some questions that may help you to find which field suits you the most.

Discover the Varying Fields in Accounting

Lots of people assume that the job scope of all accountants is similar as well as the industry, which is not true at all. There are many fields in accounting with specific expertise. Even so, a good comprehending of essential accounting skills is required in nearly all field of accounting.

There are many fields in accounting, such as managerial accountant, external auditor of an audit firm, tax agent, financial accountant, public accountant, government accountant, forensic accountant or financial planner.

Outline Your Career Pathway

You should first equip a good comprehension of different career choices in the accounting field, then you can make a decision on which route to choose. Most of the accounting positions require efficiency in basic skillset. For instance, are you familiar with Balance Sheet, Profit and Loss as well as the Cash Flow Statement? These skills generally consist of analytical ability and capability to arrange and analyse data. Then, every path would call for distinct skillset.

Opting for Your Most Ideal Job: Which Type of Company You Would Like to Work In?

It is an indisputable fact that accounting services are essential for every kind of business, be it a small company or a big corporation. Subsequently, you can choose which company you want to work in. You should take into account what kind of workplace where you want to work in. Do you take joy in spending time alone surrounded by documents and folders? Or do you like to immerse yourself in meetings? Also, you should think of your goal in minds: would you like to involve yourself in a team of consultants or team of accountants?

With a clear understanding of the accounting field and deciding the best job that suits your character and strengths, the next move will be planning your career path.

Mapping Your Career Pathway

You are very likely need to acquire a Bachelor’s Degree – you don’t need to go to a leading prominent university, just seek suggestion from a well-known accounting firm in Singapore.

You can take on internships in an accounting firm so that you can obtain practical experience of the needs of the job and understanding into the nature of the job. After gaining some experience at work and being assessed, you can sign up for a Master’s Degree program to be more skilled in your area.

Preparing your career pathway as an accountant is vital. Bear in mind, qualifications do not make up a whole person. More importantly, your mindset, character and connections you establish are the keys to success. You will learn more and have a more promising career by being investigative, ready to learn while having legitimate networks with your peers, mentors, teachers and managers.

It is important for all SMEs to be geared up with accounting function given the stiff competition nowadays. These services are meant to ensure all the financial transactions were handled appropriately. Occasionally it is practical to contract out financial matters that are extremely tedious especially when the work can be done properly by using an accounting service in Singapore.

Below are the key advantages that an SME can expect by outsourcing their accounting functions:

The company get handy tips (Also see Common Accounting Mistakes Made By Small Businesses) from the outsourced accounting firm. On top of the cost saving with lower priced outsourced services, the fresh eye may also help detect any control weakness that may have existed before the outsourcing.
The key personnel end up being without time consuming and non-value adding tasks. It gives them the ability to be more focus upon even more curcial financial strategies for the improvement of the company.
There is no need of fretting any longer regarding the quick turnover of the personnel as the staff management is now something only occurs at the service provider’s end and that in other words outsourced the headache to someone else.

How do you choose a trustable accounting firm?

There are tons of accounting firm in Singapore that are providing such services. You have to choose the one that really helps you to keep details bookkeeping needs. The very first step is to evaluate whether your organisation will obtain benefit that outweigh the cost of outsourcing. It will certainly aid you to discover the most effective firm for the job.

Price

Prices and fees depend on the type of service that you want to outsource but need to be budget-friendly in terms of value. Staying away from ultra low-cost firm sometimes help you to stay clear of problems because the quality is also usually compromised. Consider from the perspective of value instead may lead you to a better option.

Experience

The years of experience can give you some hints of the effectiveness of the provider. Just those business that employ people having a considerable experience in financing, taxes, audit, costs and accounts can deliver the most effective for your business.

Technology

It is critical to determine whether the agency makes use of the efficient technology such as cloud based accounting software to manage your work and has the capability to use them for swift and anticipated results.