 Hello and welcome to the session. In this session we will discuss how to prepare and analyze balance sheet of a company. First of all we are going to discuss what is a balance sheet. Balance sheet reports the financial position of the company at a particular point of time. Most of the time balance sheet is prepared at the end of the financial year. The balance sheet calculates assets and liabilities of a company. Now we are going to see what are assets and these are the economic resources owned by the company for example cash, property etc. These are of two types. One is current assets and the second is non-current or fixed assets. Now current assets are those assets which are being used as cash or will be converted into cash within an year. For example accounts, inventories, short-term investments, supplies, prepaid etc. Non-current assets or fixed assets are those assets which cannot be converted or will not be converted into cash within an year. Now equipments, buildings, land etc. are some of the examples of non-current assets or fixed assets. And we should note that total assets are given by current assets plus non-current assets. Next we have liabilities. These are the debts of the company or the money which has to be paid by the company to its creditors. Now un-owned revenues, accounts, payable etc. are some of the examples of liabilities. Now liabilities are also of two types and these are current liabilities and long-term liabilities. Current liabilities are the payments which the company has to make within an year. For example short-term notes payable, accounts payable, taxes etc. Now long-term liabilities are those payment which will be made by the company in the long run and not within one year. Bank loans, mortgage, bonds etc. are some of the examples of long-term liabilities. Thus total liabilities are given by current liabilities plus long-term liabilities. Now we will learn how to interpret balance sheets. Now we consider the following balance sheet of a company for two years 2010 and 2011. Now we see that in the year 2011 the current assets are $655 and in 2010 they were $970. Also current liabilities in 2011 are $170 and in 2010 they were $215. So our first interpretation is in 2011 both current assets and current liabilities decreased as compared to 2010 but decreasing current assets is more than decreasing current liabilities. Now if we compare the value of fixed assets we see that there is increase in the value of buildings, land and furniture and fittings in 2011 as compared to 2010. It is $1,850 in 2011 and $1,075 in 2010. So our second interpretation is the company has followed an expansion program as addition in land and building is being reflected. Also we can interpret from the given data that there is an increase in fixed assets and long-term liabilities in 2011 as compared to 2010 but increase in fixed assets is more than increase in long-term liabilities. Thus in this session we have discussed how to prepare and analyze balance sheet. This completes our session. Hope you enjoyed this session.