QuickBooks Desktop 2023 balance sheet a vertical analysis. Let’s do it with Intuit QuickBooks Desktop 2023.
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Here we are in QuickBooks Desktop sample Rockcastle construction practice file provided by QuickBooks going through the setup process we do every time maximizing the homepage to the gray area view drop down noting
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that we have the hide icon bar and open windows list checked off open windows on the left hand side reports drop down company and financial looking at the P and L this time range change a 101 to 412 31 to four, customize the report up top with the fonts and numbers changing it on up to 12.
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Okay, yes. Okay. And then we’re gonna go to the reports again, company and financial this time the big balance sheet changed at this time with the fiscal year dropdown fiscal year.
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That’s the one we want customizing it up top with the fonts and numbers changing to 12. Okay, yes. And okay, that’s the setup process.
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We do every time. In prior presentations, we’ve been looking at the customization tools up top, noting that they’re not just applicable to the balance sheet. But generally to all reports, we’re continuing on with that now,
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this time, with a percentage kind of calculation of vertical analysis type of tool. As we use it. Remember, there could be differences in the outcome depending on the type of report, for example, balance sheet reports being as of a point in time,
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the profit and loss or income statement reports have a timeframe, basically measuring performance over here where the balance sheet is showing us where we stand. As of a point in time, we’ll talk more about the profit and loss, we’ll apply this tool to it in future presentations.
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So we’re gonna go to the Customize reports up top, and we’re just looking on the Display tab, we’re looking at the percent of columns, that’s it, we’re just checking that one off and saying, okay, and we get this percentage column on the right hand side.
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Now, sometimes you call this like a vertical analysis, as opposed to what we did last time when we saw a percent column, which was a horizontal type of analysis. In other words, if we’re thinking about the change, as we saw last time,
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from one period to the last period, one month to the next month, the difference between the two, and then we’re looking at a percentage increase or decrease. That’s one kind of way we can look at a percentage analysis.
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Another way we can do it is to say, let’s compare this line item here, for example, the checking account to the total, which in the case of the balance sheet is going to be the the total assets.
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So we’re total assets down here. So when I’m way down here, how did you say, so I’m gonna,
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I’m gonna minimize the liabilities and equity and just look at the asset side of things. So we can think of this then kind of like you would think of a portfolio for example of your investments.
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But in this case, we’re talking about a business, a business that has 640,072 33 in assets, question being then where are those assets located? From $1 perspective, we usually look at it that way.
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But we can also do it on a percentage basis. And again, that can be quite useful because we can compare it to other companies, we might be benchmarking to other companies, possibly companies that are larger than us.
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We can’t really compare the fixed asset dollar amount, for example, but we might try to compare how much money we have invested in fixed assets versus other companies, how much? How much do we have liquid in comparison on a on a percentage basis to our total, as with other companies, and certain industries,
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you would expect to have similar kinds of ratios because of course, if we’re in business, we might be in a business where we’re trying to invest most of our money into property, plant and equipment, for example,
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because that’s the thing that’s going to be used to generate revenue into the future. So let’s see how this would work. Then on the calculations, we could say,
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Okay, let’s look at the total cash. We’ve got the 6560 537 9.29 divided by the total assets down here divided by the total Have 6407 2.33 That gives us about I’m going to make this a little wider if I can wide enough, there we go.
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That gives us 10. If I move the decimal two places over 10.2 About so that would be the general idea that we can then compare the other companies,
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how much do we have like in accounts receivable that basically we’re waiting on hopefully a customer to be paying us with, we’ve got the 9810 5.19 divided by the total divided by the total of 6407 2.33, about moving the decimal two places over 15.3%.
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So and these can give us some indications as to whether are we aligned up in a similar fashion as other companies that again,
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we’re trying to basically benchmark to, we could do a similar kind of calculations down here on the liability and equity side, noting that the bottom line for liability and equity will be the same because assets equal liabilities, and equity.
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So we could then be comparing, say, total liabilities, even, we could say, here’s our total liabilities.
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And so if I take that percent, which got we’ve got the 4204, for 2.73, divided by my liabilities and equity divided by the 6407 2.33, that gives us our 65.7%. And that’s kind of the liabilities are what we owe to a third party.
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So it’s kind of a leverage type of calculation that we, you know, possibly loans and whatnot that we have in the liability as opposed to the equity representing the ownership percentage.
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So remember, if you think about the balance sheet, assets minus liabilities, assets, equal liabilities plus equities, you can also calculate it this way, you could say assets are 6407 2.33, minus the liabilities.
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So the liabilities which are owed to a third party, which are 42044 2.73 gives us the equity, which is then attributable to the owner’s right, that’s kind of the book value worth of the company,
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which you can then break out depending on the kind of ownership sole proprietorship, one owner, partnership, multiple partner capital accounts, or Corporation, which is broken up by the shares of ownership.
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And then you could say, okay, I can take that 219 to 269, divided by the total liabilities and equity, which is the same as the total assets.
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Because these are two sides of the same coin, you can think of it as this is what the company has, this is who has claim to what the company has either third party liabilities,
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the bank, most likely, and then equity, us as the owners, I always think of ourselves as the business owner.
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So we’re gonna say that’s gonna be that divided by the 64027 2.33. And we get the 34.3.
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So you can see how this is getting into kind of a percentage or ratio analysis kind of tools, that of course, can be quite useful when kind of judging the health of a of a company and doing comparisons to the industry and comparisons to other companies and so on comparisons to our past, and that kind of stuff.
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So let’s go up top and do our normal change here. So if I was to customize this, I’m going to remove this stuff here, this date doesn’t make any Well, this date, still, that’s they’d still good. And we could change the name to maybe a balance sheet vertical analysis, we can take off the pennies, possibly, we’ll put some brackets around the negative numbers.
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So let’s do that customizing. Let’s go to the headers and footers. And I’m going to say this is going to be a balance sheet, vertical. And now since if I mess up any spelling again, you’ll have to forgive me,
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I’m going to say take off a date time report basis, maybe we put our name and the footer down here as we’ve been doing fonts and numbers.
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Let’s say we want the the parentheses negative numbers to be read and take the pennies off of it. And then we say okay, so there we have the balance sheet, vertical analysis, percentage column, no panties a little bit cleaner to look at red numbers on the negative numbers.
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And if I was to check out the printing preview page, like so, you’ve got the name on the footer. So where are we? There we go. My name is on the foot, long as it’s not under the foot, then that’s okay. So there we go. So there we go. So that’s the general idea with the vertical analysis.