Chapter Name: Analyse a balance sheet
Description:Covers understanding assets, liabilities, and equity to assess financial position.
Purpuse:To evaluate a business’s stability and solvency.
Rational:A balance sheet helps entrepreneurs manage debt, investments, and operational risks.
Chapter Assessment
Expected Supporting Evidence:
Portfolio of Evidence 1: An explanation is given of the purpose of a balance sheet with reference to how often a balance sheet is necessary. - Explains how balance sheets provide a financial snapshot of assets, liabilities, and equity, and how frequently they should be updated (monthly/quarterly/annually).
Portfolio of Evidence 2: The liabilities in a balance sheet are classified in terms of long-term and current liabilities. - Describes the differences, with examples (e.g., long-term loan vs. accounts payable), and shows correct classification.
Portfolio of Evidence 3: Assets and liabilities are determined in a new venture context. - Identifies and records assets (e.g., stock, equipment) and liabilities (e.g., debts) for a specific venture.
Portfolio of Evidence 4: A balance sheet is evaluated in terms of equity and/or financial net worth. - Interprets the balance sheet to assess financial health through net worth calculation (assets – liabilities = equity).
Portfolio of Evidence 5: A balance sheet is drawn up for a new venture. - Presents a full balance sheet listing all assets, liabilities, and equity with accurate categorisation.
Workplace Activities
Activity 1: Explain balance sheet purpose and frequency.
Report, educational materials.
Activity 2: Classify liabilities in a balance sheet.
Completed classification report.
Activity 3: Identify venture-specific assets and liabilities.
Completed balance sheet.
Activity 4: Evaluate equity/net worth.
Equity analysis report.
Activity 5: Compile a balance sheet.
Balance sheet document.