Module I· Three-Statement Mechanics & LinkagesIntermediate
Question
How is the balance sheet structured — assets and liabilities & equity?
Answer
Assets (left side)
- Non-current assets (long-term): property, plant & equipment (PP&E), intangible assets, goodwill, financial assets.
- Current assets (short-term): inventory, trade receivables (AR), other receivables, cash.
Equity & liabilities (right side)
- Equity: share capital, additional paid-in capital, retained earnings, OCI.
- Non-current liabilities: bonds, bank loans, pension provisions, deferred taxes.
- Current liabilities: trade payables, other provisions, short-term bank debt.
Deep diveShow more details
Ordering
Local GAAP sorts assets by increasing liquidity (fixed to liquid), IFRS by decreasing liquidity — both are permitted.
IB focus
The two most important derived figures for valuation:
```
Net debt = interest-bearing debt − cash
Working capital = current assets excluding cash − current liabilities excluding bank debt
```