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COR-BalanceSheet - Balance Sheet Explanations of Numbers...

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Balance Sheet Explanations of Numbers — Suggestions and Tips Your company's balance sheet summarizes the company's year-end financial status. Note 6 to the balance sheet contains information on all the company's 5-year and 10-year loans outstanding. This Help screen contains explanations of what the balance sheet numbers mean and how they are calculated. There's a Tips and Suggestion section to guide you in using the Balance Sheet data wisely. A section describing two other blocks of data presented just to the right of the Notes to the Balance Sheet winds up the contents of this ?/Help screen. Understanding the Numbers in the Balance Sheet A brief discussion and explanation of each of the balance sheet entries is presented below. The first grouping is for the company's assets; the second is for the liabilities and stockholder equity entries. Assets: Cash on Hand — This number represents the amount in the company's checking account at the end of the report year. Accounts Receivable — The company does not immediately receive payment for all of the branded and private- label pairs sold in a given year. There is an average 90-day delay in receiving the cash for pairs that have been booked as sold. Revenues are booked when the pairs are shipped from the distribution warehouses, but, on average, the cash received from these sales does not become available for company use until 90 days later. Thus, accounts receivable are always 25% of the net revenues from footwear sales as reported on the company's income statement. Note 1 to the balance sheet statement reports the size of net revenues. Footwear Inventories — This number represents the value of all branded pairs in inventory in all four regional distribution centers at year-end, as reported on the Distribution and Warehouse Report (see the next to last line in the Cost of Branded Pairs Sold section). The valuation of the pairs in year-end inventories includes (1) production costs, (2) any applicable exchange rate adjustments to production costs on pairs shipped from a plant to distribution centers in another geographic regions, (3) freight charges on pairs shipped from plants to distribution centers, and (4) any tariffs paid on pairs shipped to distribution centers. Net Plant Investment — This number represents the undepreciated value of the company's investment in plant capacity, as reported in more detail in the Plant Operations Report. Work in Progress — Work in progress refers to new investments in plant capacity and plant upgrades that were ordered at the beginning of the year and that were being constructed and installed during the year. Any amounts classified as work in progress will be added to gross investment next year and subject to depreciation at a straight line rate of 5% annually.
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