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Net Worth Statements

Net Worth Statements. Original PowerPoint Created by Mike White Modified by Georgia Agricultural Education Curriculum Office June, 2002. Ag Business Management Spring 1999. Objectives. Distinguish between assets and liabilities. Give examples of each category of assets and liabilities.

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Net Worth Statements

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  1. Net Worth Statements Original PowerPoint Created by Mike White Modified by Georgia Agricultural Education Curriculum OfficeJune, 2002 Ag Business Management Spring 1999

  2. Objectives • Distinguish between assets and liabilities. • Give examples of each category of assets and liabilities. • Describe the structure and major components of a balance sheet. • Accurately transfer financial information to a balance sheet.

  3. Purpose of a Net Worth Statement • Shows financial condition at a specific point in time. • Shows solvency (do assets exceed liab. ?) • Measure liquidity (will firm meet financial obligations?)

  4. Purpose of Net Worth Statement • Financial Condition - cont. • Evaluate risk-bearing capacity (how much loss could business sustain?) • Identify collateral (avail. to support loan) • Compare records over time to see trends.

  5. Components of Net Worth St. • Assets • Liabilities • Owner Equity

  6. Assets • Current • Used or sold and converted to cash within 12 months • Non-current • Used in producing a product or not sold and not converted into cash within 12 months.

  7. Liabilities • Current • Payable within one year. • Non-current • Due in more than one year.

  8. Owner Equity • Total assets - Total liabilities • Same as Net Worth

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