Introduction
There are three primary financial statements that are used for evaluating a business, and a balance sheet is one of them. Its purpose is to report an organization’s liabilities, assets, and equity of shareholders. In other words, a balance sheet provides a rather quick overview of the financial status of a company on a given day (Epstein, 2014). There are two sides to a balance sheet: the debit and the credit ones. All the entered transactions have to be balanced so that all money that is going out and in is accounted for.
Main body
Certain basic rules guide the preparation of a balance sheet. These rules specify how several particular elements, like format, numbers, and dates, need to be presented (Thermond, 2014). Since there is information about an organization’s financial position on any specific day provided in a balance sheet, the date has to be prepared on the very last day of the presented period and appear on top of the balance sheet. Moreover, it is necessary to pay close attention to the type of currency and numbers used in a balance sheet’s preparation.
A common-size balance sheet is also a financial statement that presents a business’s liabilities, assets, and equity, and all line items are shown as the total category’s percentage. This type of balance sheet executives and managers use while comparing several competing companies of different sizes (Epstein, 2014). In order to calculate common-size percentages, it is necessary to divide the amount by base amount and multiply it by a hundred to get a percentage.
Conclusion
Just like all other major companies, Adidas has its balance sheet. If to look closer at its numbers, it becomes possible to see that there is something outstanding in this balance sheet. First of all, it is incredible that in one year, 2019, the company managed to increase its total assets by almost five million (from 15,612,000 in 2018 to 20,680,000) (“Adidas AG (ADDYY),” n.d.). Moreover, again after one year, they increased their capital lease obligations from 91,000 to 3,132,000 (“Adidas AG (ADDYY),” n.d.). It is hard to disagree that the results of this company are brilliant.
References
Adidas AG (ADDYY). (n.d.). Yahoo! Finance. 2020, Web.
Epstein, L. (2014). Financial decision making: An introduction to financial reports. Bridgepoint Education.
Thermond, J. (2014). Mastering the balance sheet can make or break a startup. Forbes. Web.