{"id":27315,"date":"2024-02-07T10:59:22","date_gmt":"2024-02-07T10:59:22","guid":{"rendered":"https:\/\/swoopfunding.com\/us\/?post_type=blog&p=27315"},"modified":"2024-04-17T09:18:08","modified_gmt":"2024-04-17T09:18:08","slug":"what-are-assets-liabilities-and-equity","status":"publish","type":"blog","link":"https:\/\/swoopfunding.com\/us\/blog\/what-are-assets-liabilities-and-equity\/","title":{"rendered":"What are assets, liabilities and equity?"},"content":{"rendered":"\n
Assets, liabilities and equity are three core elements of a company’s balance sheet. They offer a look at what your company owns, owes and allows you to know the true performance both past and present so you can make strategic plans for the future. <\/p>\n\n\n\n
Assets, liability and equity all have their differences but they overlap and weave together on your balance sheet. Being able to organize them correctly will make the difference in a correct balance sheet or a clustered one. Let\u2019s look at them individually. <\/p>\n\n\n\n
Assets simply put are what you own. They are thel resources a company owns and uses for its operations, contributing to revenue generation. They are broadly categorized into:<\/p>\n\n\n\n
The total assets of a company are the sum of its current and noncurrent assets. The formula is straightforward:<\/p>\n\n\n\n
Total Assets = Current Assets + Non-Current Assets<\/strong><\/p>\n\n\n\n Let\u2019s take this formula and consider a simplified scenario for a business. <\/p>\n\n\n\n Total Assets = $100,000<\/strong><\/p>\n\n\n\n This calculation reveals the business’s total assets to be $100,000, encompassing both its immediate resources and long-term investments.<\/p>\n\n\n\n Liabilities in its simplest form are what you owe. These are the financial obligations<\/a> a company owes to external parties, categorized based on their due period:<\/p>\n\n\n\n Total liabilities are calculated by adding together all current and long-term liabilities:<\/p>\n\n\n\n Total Liabilities = Current Liabilities + Long-Term Liabilities<\/strong><\/p>\n\n\n\n Let\u2019s consider a business with the following liabilities: <\/p>\n\n\n\n Applying the formula:<\/p>\n\n\n\n Total Liabilities = $8,000(Accounts Payable) + $2,000(Accrued Expenses) + $5,000(Short-term Loans) + $20,000(Long-term Debt) + $3,000(Deferred Revenue)<\/p>\n\n\n\n Total Liabilities = $38,000<\/strong><\/p>\n\n\n\n This demonstrates that the business has total liabilities of $38,000, indicating the sum of its immediate and future financial obligations.<\/p>\n\n\n\n Equity, often referred to as shareholders’ equity or owners’ equity, encapsulates the owner’s stake in the company. It’s what remains of the assets after all liabilities have been settled. Key components include:<\/p>\n\n\n\n Total equity is calculated by subtracting total liabilities from total assets, which can also be seen as the net assets owned by shareholders:<\/p>\n\n\n\n Total Equity = Total Assets \u2212 Total Liabilities<\/strong><\/p>\n\n\n\n Leveraging the numbers from our previous examples:<\/p>\n\n\n\n Using the total equity formula:<\/p>\n\n\n\n Total Equity = $100,000(Total Assets) \u2212 $38,000(Total Liabilities)<\/p>\n\n\n\n Total Equity = $62,000<\/strong><\/p>\n\n\n\n This calculation indicates that the business’s equity, or the residual interest in the company’s assets after all debts have been paid, is $62,000. This equity value is crucial for owners and investors as it represents the net value of the company attributable to them.<\/p>\n\n\n\n Assets, liabilities, and equity are important because they form the basic framework for evaluating a company’s financial health. With it you can see how well a company has performed, what it has earned, what it has spent and how the shareholders have benefited or invested over time.<\/p>\n\n\n\n For your business, understanding assets, liabilities, and equity means grasping the core financial components that dictate its operational success and stability. <\/p>\n\n\n\n Assets: <\/strong>The lifeblood of your business operations, assets hold everything your company owns with value. They are a representation of resources at your disposal.<\/p>\n\n\n\n Liabilities: <\/strong>While often perceived negatively, liabilities are a sole part of business dynamics, representing the financial commitments your company must honor. They indicate the obligations that need to be managed efficiently. <\/p>\n\n\n\n Equity:<\/strong> Equity serves as the barometer of shareholder value\u2013 the net worth of your company after all liabilities have been settled. It reflects the cumulative result of your business operations over time, including retained earnings, capital infusions and adjustments for gains or losses.<\/p>\n\n\n\n In the intricate landscape of finance, the mastery of assets, liabilities and equity is not merely foundational\u2014it’s transformative. These critical financial pillars do more than just outline the present state of your business’s finances; they are the indicators of your company’s potential for growth and enduring success. By effectively managing them, you unlock a clearer vision for strategic decision-making, risk management and investment opportunities.<\/p>\n\n\n\n Here at Swoop, we understand the unique challenges and opportunities that you face in the financial ecosystem. Our platform is designed to empower businesses like yours with innovative funding solutions that resonate with your specific needs. From securing the right loans to optimizing your equity and managing liabilities, our tailored services are here to support your aspirations. Assets, liabilities and equity are three core elements of a company’s balance sheet. They offer a look at what your company owns, owes and allows you to know the true performance both past and present so you can make strategic plans for the future. Examples of assets, liabilities and equity Assets, liability and equity all […]<\/p>\n","protected":false},"author":99,"featured_media":27316,"comment_status":"closed","ping_status":"closed","template":"","category":[344,340],"acf":[],"featured_image_urls":{"full":["https:\/\/swoopfunding.com\/us\/wp-content\/uploads\/sites\/3\/2024\/02\/assets-liabilities-and-equity-featured-scaled.jpg",2560,1920,false],"thumbnail":["https:\/\/swoopfunding.com\/us\/wp-content\/uploads\/sites\/3\/2024\/02\/assets-liabilities-and-equity-featured-150x150.jpg",150,150,true],"medium":["https:\/\/swoopfunding.com\/us\/wp-content\/uploads\/sites\/3\/2024\/02\/assets-liabilities-and-equity-featured-300x225.jpg",300,225,true],"medium_large":["https:\/\/swoopfunding.com\/us\/wp-content\/uploads\/sites\/3\/2024\/02\/assets-liabilities-and-equity-featured-768x576.jpg",768,576,true],"large":["https:\/\/swoopfunding.com\/us\/wp-content\/uploads\/sites\/3\/2024\/02\/assets-liabilities-and-equity-featured-1024x768.jpg",1024,768,true],"1536x1536":["https:\/\/swoopfunding.com\/us\/wp-content\/uploads\/sites\/3\/2024\/02\/assets-liabilities-and-equity-featured-1536x1152.jpg",1536,1152,true],"2048x2048":["https:\/\/swoopfunding.com\/us\/wp-content\/uploads\/sites\/3\/2024\/02\/assets-liabilities-and-equity-featured-2048x1536.jpg",2048,1536,true],"image_blog":["https:\/\/swoopfunding.com\/us\/wp-content\/uploads\/sites\/3\/2024\/02\/assets-liabilities-and-equity-featured-408x252.jpg",408,252,true],"image_podcast":["https:\/\/swoopfunding.com\/us\/wp-content\/uploads\/sites\/3\/2024\/02\/assets-liabilities-and-equity-featured-397x298.jpg",397,298,true],"image_banking":["https:\/\/swoopfunding.com\/us\/wp-content\/uploads\/sites\/3\/2024\/02\/assets-liabilities-and-equity-featured-27x20.jpg",27,20,true],"image_blog_internal":["https:\/\/swoopfunding.com\/us\/wp-content\/uploads\/sites\/3\/2024\/02\/assets-liabilities-and-equity-featured-840x480.jpg",840,480,true],"image_blog_medium":["https:\/\/swoopfunding.com\/us\/wp-content\/uploads\/sites\/3\/2024\/02\/assets-liabilities-and-equity-featured-1024x500.jpg",1024,500,true],"image_single_banking":["https:\/\/swoopfunding.com\/us\/wp-content\/uploads\/sites\/3\/2024\/02\/assets-liabilities-and-equity-featured-80x60.jpg",80,60,true]},"post_excerpt_stackable":" Assets, liabilities and equity are three core elements of a company’s balance sheet. They offer a look at what your company owns, owes and allows you to know the true performance both past and present so you can make strategic plans for the future. Examples of assets, liabilities and equity Assets, liability and equity all have their differences but they overlap and weave together on your balance sheet. Being able to organize them correctly will make the difference in a correct balance sheet or a clustered one. Let\u2019s look at them individually. Assets Assets simply put are what you own.…<\/p>\n","category_list":"SME support<\/a>, Swoop guides<\/a>","author_info":{"name":"Ashlyn Brooks","url":"https:\/\/swoopfunding.com\/us\/author\/ashlyn-brooks\/"},"comments_num":"0 comments","featured_image_urls_v2":{"full":["https:\/\/swoopfunding.com\/us\/wp-content\/uploads\/sites\/3\/2024\/02\/assets-liabilities-and-equity-featured-scaled.jpg",2560,1920,false],"thumbnail":["https:\/\/swoopfunding.com\/us\/wp-content\/uploads\/sites\/3\/2024\/02\/assets-liabilities-and-equity-featured-150x150.jpg",150,150,true],"medium":["https:\/\/swoopfunding.com\/us\/wp-content\/uploads\/sites\/3\/2024\/02\/assets-liabilities-and-equity-featured-300x225.jpg",300,225,true],"medium_large":["https:\/\/swoopfunding.com\/us\/wp-content\/uploads\/sites\/3\/2024\/02\/assets-liabilities-and-equity-featured-768x576.jpg",768,576,true],"large":["https:\/\/swoopfunding.com\/us\/wp-content\/uploads\/sites\/3\/2024\/02\/assets-liabilities-and-equity-featured-1024x768.jpg",1024,768,true],"1536x1536":["https:\/\/swoopfunding.com\/us\/wp-content\/uploads\/sites\/3\/2024\/02\/assets-liabilities-and-equity-featured-1536x1152.jpg",1536,1152,true],"2048x2048":["https:\/\/swoopfunding.com\/us\/wp-content\/uploads\/sites\/3\/2024\/02\/assets-liabilities-and-equity-featured-2048x1536.jpg",2048,1536,true],"image_blog":["https:\/\/swoopfunding.com\/us\/wp-content\/uploads\/sites\/3\/2024\/02\/assets-liabilities-and-equity-featured-408x252.jpg",408,252,true],"image_podcast":["https:\/\/swoopfunding.com\/us\/wp-content\/uploads\/sites\/3\/2024\/02\/assets-liabilities-and-equity-featured-397x298.jpg",397,298,true],"image_banking":["https:\/\/swoopfunding.com\/us\/wp-content\/uploads\/sites\/3\/2024\/02\/assets-liabilities-and-equity-featured-27x20.jpg",27,20,true],"image_blog_internal":["https:\/\/swoopfunding.com\/us\/wp-content\/uploads\/sites\/3\/2024\/02\/assets-liabilities-and-equity-featured-840x480.jpg",840,480,true],"image_blog_medium":["https:\/\/swoopfunding.com\/us\/wp-content\/uploads\/sites\/3\/2024\/02\/assets-liabilities-and-equity-featured-1024x500.jpg",1024,500,true],"image_single_banking":["https:\/\/swoopfunding.com\/us\/wp-content\/uploads\/sites\/3\/2024\/02\/assets-liabilities-and-equity-featured-80x60.jpg",80,60,true]},"post_excerpt_stackable_v2":" Assets, liabilities and equity are three core elements of a company’s balance sheet. They offer a look at what your company owns, owes and allows you to know the true performance both past and present so you can make strategic plans for the future. Examples of assets, liabilities and equity Assets, liability and equity all have their differences but they overlap and weave together on your balance sheet. Being able to organize them correctly will make the difference in a correct balance sheet or a clustered one. Let\u2019s look at them individually. Assets Assets simply put are what you own.…<\/p>\n","category_list_v2":"SME support<\/a>, Swoop guides<\/a>","author_info_v2":{"name":"Ashlyn Brooks","url":"https:\/\/swoopfunding.com\/us\/author\/ashlyn-brooks\/"},"comments_num_v2":"0 comments","_links":{"self":[{"href":"https:\/\/swoopfunding.com\/us\/wp-json\/wp\/v2\/blog\/27315"}],"collection":[{"href":"https:\/\/swoopfunding.com\/us\/wp-json\/wp\/v2\/blog"}],"about":[{"href":"https:\/\/swoopfunding.com\/us\/wp-json\/wp\/v2\/types\/blog"}],"author":[{"embeddable":true,"href":"https:\/\/swoopfunding.com\/us\/wp-json\/wp\/v2\/users\/99"}],"replies":[{"embeddable":true,"href":"https:\/\/swoopfunding.com\/us\/wp-json\/wp\/v2\/comments?post=27315"}],"version-history":[{"count":3,"href":"https:\/\/swoopfunding.com\/us\/wp-json\/wp\/v2\/blog\/27315\/revisions"}],"predecessor-version":[{"id":29404,"href":"https:\/\/swoopfunding.com\/us\/wp-json\/wp\/v2\/blog\/27315\/revisions\/29404"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swoopfunding.com\/us\/wp-json\/wp\/v2\/media\/27316"}],"wp:attachment":[{"href":"https:\/\/swoopfunding.com\/us\/wp-json\/wp\/v2\/media?parent=27315"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swoopfunding.com\/us\/wp-json\/wp\/v2\/category?post=27315"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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If you were needing to calculate your total assets, you would use the formula as so:
Total Assets = $20,000(Cash) + $15,000(Accounts Receivable) + $10,000(Inventory) + $50,000(Property and Equipment) + $5,000(Intangible Assets)<\/p>\n\n\n\nLiabilities<\/strong><\/h3>\n\n\n\n
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How to calculate total liabilities<\/strong><\/h4>\n\n\n\n
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Equity<\/strong><\/h3>\n\n\n\n
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How to calculate total equity<\/strong><\/h4>\n\n\n\n
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Why are assets, liabilities and equity important?<\/strong><\/h2>\n\n\n\n
What do they mean for your business?<\/strong><\/h3>\n\n\n\n
Final thoughts<\/strong><\/h2>\n\n\n\n
Book a call with us today<\/strong><\/a>. You’ll discover a spectrum of funding options crafted to enhance your financial posture and accelerate your business’s journey towards its goals.<\/p>\n","protected":false},"excerpt":{"rendered":"