The Reformulating the Balance Sheet: 1. All assets are either operating or non-operating. Operating assets are used to generate...

50.1K

Verified Solution

Question

Finance

The Reformulating the Balance Sheet:
1.All assets areeither operating or non-operating.Operating assets are used to generate sales whilenon-operatingassets aretypically excess monies that have not yet been invested inoperating assets or excess cash that will bereturned to thebondholders and stockholders at some point in thefuture.
2.Typicalnon-operatingassets are excesscash or cash equivalents and investments.  All other assets are typicallyoperating.
3.Typicalnon-operatingliabilities arecurrent portion of long term debt, long term debt, and capitalizedlease obligations. All other liabilities including accountspayable, and accrued expenses are typically operatingliabilities.
4.Investedcapital equals operatingassets minus operatingliabilities.
5.Netnon-operatingassets or netliabilities equals non-operatingassets minus non-operatingliabilities.
Sample BalanceSheet:
Cashneeded foroperations?200?Accountspayable ?300
Excesscash?600?Accruedexpenses?250
Inventory?400?Currentportion of Long termdebt?150?
Investmentin marketablesecurities?300?Longterm debt?  1000
Plant property andEquipment?  1100?StockholdersEquity?900
Totalassets?  2600?2600
What are thetwo non-operatingassets??Whatdo they sum to?
What are thetwo non-operatingliabilities??Whatdo they sum to?
What are the threeoperating assets??Whatdo they sum to?
What are the twooperating liabilities??Whatdo they sum to?
Calculatethe investedcapital.?Calculatethe net non-operatingliability.
Please construct abalance sheet with invested capitalonthe leftside and thesum of net non-operatingliabilities andstockholders’ equity on the other, thebalance sheet must balance.

Answer & Explanation Solved by verified expert

4.0 Ratings (636 Votes)

QueryWhat are the two nonoperating assetsWhat do they sum to ReplyThe two nonoperating assets are Excess Cash 600 Investment in marketable securities 300 Sum of above 900 QueryWhat are the two nonoperating liabilitiesWhat do they sum to ReplyThe two non See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

The Reformulating the Balance Sheet:1.All assets areeither operating or non-operating.Operating assets are used to generate sales whilenon-operatingassets aretypically excess monies that have not yet been invested inoperating assets or excess cash that will bereturned to thebondholders and stockholders at some point in thefuture.2.Typicalnon-operatingassets are excesscash or cash equivalents and investments. All other assets are typicallyoperating.3.Typicalnon-operatingliabilities arecurrent portion of long term debt, long term debt, and capitalizedlease obligations. All other liabilities including accountspayable, and accrued expenses are typically operatingliabilities.4.Investedcapital equals operatingassets minus operatingliabilities.5.Netnon-operatingassets or netliabilities equals non-operatingassets minus non-operatingliabilities.Sample BalanceSheet:Cashneeded foroperations?200?Accountspayable ?300Excesscash?600?Accruedexpenses?250Inventory?400?Currentportion of Long termdebt?150?Investmentin marketablesecurities?300?Longterm debt? 1000Plant property andEquipment? 1100?StockholdersEquity?900Totalassets? 2600?2600What are thetwo non-operatingassets??Whatdo they sum to?What are thetwo non-operatingliabilities??Whatdo they sum to?What are the threeoperating assets??Whatdo they sum to?What are the twooperating liabilities??Whatdo they sum to?Calculatethe investedcapital.?Calculatethe net non-operatingliability.Please construct abalance sheet with invested capitalonthe leftside and thesum of net non-operatingliabilities andstockholders’ equity on the other, thebalance sheet must balance.