EDNA Vlog

Common Size Balance Sheet Chapters 00:00 Introduction 01:00 What is Common Size Balance Sheet 02:00 What is Common Size Balance Sheet 03:52 Common Size Balance Sheet Formula 04:32 Colgate’s Case Study – Common Size Balance Sheet Analysis In this video, we discuss about Common Size Balance Sheets, how to prepare them and why they are so important. What is a Common Size Balance Sheet? Common Size Balance Sheet refers to percentage analysis of balance sheet items on the basis of the common figure as each item is presented as a percentage that is easy to compare. Formula for Common Size Balance Sheet = (Line Item / Total Assets)*100 Uses of Common Size Balance Sheets: 1. Helps in building trend lines to discover the patterns over a specific period of time 2. Helps understand the ratio and percentage of each line item clearly 3. Variations that occurred during expenses are reflected 4. Aids in comparison of income statements for two or more periods Limitations of Common Size Balance Sheet: 1. The reason behind the reduction of cash and cash equivalents remains unclear 2. Inconsistencies in data of different years unaccounted for 3. Window dressing of financial statements 4. Fails to identify qualitative elements of a companys performance 5. Doesnt measure the solvency or liquidity of a company #commonsizebalancesheet, #wallstreetmojo, #commonsizebalancesheetformula For more details, you can refer to our article at – https://www.wallstreetmojo.com/common-size-balance-sheet/ Subscribe to Our Channel – Youtube https://www.youtube.com/channel/UChlNXSK2tC9SJ2Fhhb2kOUw?sub_confirmation=1 LinkedIn https://www.linkedin.com/company/wallstreetmojo/mycompany/ Facebook https://www.facebook.com/wallstreetmojo Instagram https://www.instagram.com/wallstreetmojoofficial/ Twitter https://twitter.com/wallstreetmojo

Before you can test a clients internal controls you first need to know which internal controls are in place. The auditor can identify the internal controls by asking the clients employees to complete a questionnaire and by doing a walkthrough of the revenue and collection cycle. The walkthrough would involve following a sale from the initial customer purchase all the way through to the collection of the receivable. If the auditor notices an area where a misstatement might occur during the walkthrough, the auditor should ask: has the client designed a control that, if operating effectively, would prevent or detect a material misstatement? The auditor should also be sure to consider entity-level controls. For example: Does the audit committee play an active role? Does management closely monitor sales returns? Does management closely monitor writeoffs of accounts receivable? Does management inspect aged accounts receivable for issues with collectability? If the client has strong entity-level controls in place, this improves the control environment and reduces the risk of material misstatement. In addition to considering entity-level controls, the auditor should also identify the internal controls pertaining to each management assertion. For example, a 3-way match of a purchase order, a shipping document, and a sales invoice provides evidence about the occurrence of revenue and the existence of a receivable. Verifying the dates on these documents provides evidence about the cutoff assertion. The use of prenumbered documents provides evidence about the completeness assertion. Comparing these documents ensures that the correct type of goods and the correct quantity of goods have been shipped to the correct location and at the correct price and terms of trade. This provides evidence about the authorization and accuracy assertions. Segregation of duties is critical for the revenue and collection cycle. Remember that the revenue and collection cycle consists of 5 parts: 1. Receiving and processing customer orders 2. Approving credit 3. Delivering goods and services 4. Billing customers and managing accounts receivable 5. Collecting and depositing cash Different people or departments should be responsible for each of these 5 steps. Allowing one person to perform a combination of these activities increases the risk of fraud or other problems. Edspira is the creation of Michael McLaughlin, an award-winning professor who went from teenage homelessness to a PhD. Edspiras mission is to make a high-quality business education accessible to all people. SUBSCRIBE FOR A FREE 53-PAGE GUIDE TO THE FINANCIAL STATEMENTS, PLUS: A 23-PAGE GUIDE TO MANAGERIAL ACCOUNTING A 44-PAGE GUIDE TO U.S. TAXATION A 75-PAGE GUIDE TO FINANCIAL STATEMENT ANALYSIS MANY MORE FREE PDF GUIDES * http://eepurl.com/dIaa5z GET CERTIFIED IN FINANCIAL STATEMENT ANALYSIS, IFRS 16, AND ASSET-LIABILITY MANAGEMENT * https://edspira.thinkific.com LISTEN TO THE SCHEME PODCAST * Apple Podcasts: https://podcasts.apple.com/us/podcast/scheme/id1522352725 * Spotify: https://open.spotify.com/show/4WaNTqVFxISHlgcSWNT1kc * Website: https://www.edspira.com/podcast-2/ GET TAX TIPS ON TIKTOK * https://www.tiktok.com/@prof_mclaughlin ACCESS INDEX OF VIDEOS * https://www.edspira.com/index CONNECT WITH EDSPIRA * Facebook: https://www.facebook.com/Edspira * Instagram: https://www.instagram.com/edspiradotcom * LinkedIn: https://www.linkedin.com/company/edspira CONNECT WITH MICHAEL * Twitter: https://www.twitter.com/Prof_McLaughlin * LinkedIn: https://www.linkedin.com/in/prof-michael-mclaughlin ABOUT EDSPIRA AND ITS CREATOR * https://www.edspira.com/about/

Have you been to a meeting where you pretended to understand what you were listening to, and did that, quietly, because you were afraid of being ridiculed? Have you held back your questions because you thought they are bad questions and will, if anything, serve to expose you as an imposter, a swindler of the first degree? If the answer is yes, then watch this video. Enroll for my live class on "How to Analyze The Balance Sheet" here: https://www.lighthall.co/class/895bbedf-db7a-4700-b198-8c8e1674e20d ————————————————————- Get 30% off my Online Course on Learn how to design and build KPIs and Financial Metrics for 2 example businesses https://thefincontroller.com/p/learn-financial-metrics-kpis?coupon_code=LEARNKPIS30 Take 30% off when you enroll in my online course Night Before the Accounting Interview Guide including All Levels Q&A: https://thefincontroller.com/p/the-night-before-your-accounting-interview-course-for-all-levels?coupon_code=30OFFCOURSE Get My Controller KPI Dashboard (Excel + Course) with the most important P&L and Balance Sheet KPIs: https://thefincontroller.com/p/controller-kpi-dashboard-one-kpi-dashboard-to-run-a-business ——————————————————————— Hang Out with me on social media: https://www.instagram.com/the_financial_controller/ https://www.tiktok.com/@thefinancialcontroller https://www.facebook.com/groups/780732429036886/?source_id=101273467885666 DISCLAIMER: Links included in this description might be affiliate links. If you happen to purchase a product or service with the links that I provide I may receive a small commission. There is no additional charge to you! Thank you for supporting my channel so I can continue to provide you with free content each week! All views expressed on my channel are mine alone. Not intended as financial or professional advice