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    Balance Sheet-Indicators of success or failure

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    Please explain what information would be found in each of the following groupings on a classified balance sheets, and how what data could indicate the future success or failure of a business.

    1. Current assets
    2. Long-term investments
    3. Property, plant, and equipment
    4. Intangible assets

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    Solution Preview

    First, with regards to balance sheets, the data contained within is useless unless comparable to something. In other words, if I stated that Company ABC had current assets of $3,000,000 the information is completely useless unless we have something to compare the figure to like Company ABC's current liabilities or the industry averages. So, having stated that balance sheet amounts are only useful as comparisons:

    The amount of current assets of a firm is useful because we can compare it to current liabilities to determine a firm's ability to pay short ...

    Solution Summary

    The solution describes what parts of a balance sheet can indicate success or failure of a firm.