Common Terms Used In the Balance Sheet With Examples

  1. Sales: This refers to the total revenue that a company earns from selling its products or services.
  2. Expenses: These are the costs incurred by the company in its operational activities. It includes things like salaries, rent, utilities, and other operational costs.
  3. Operating Profit: This is the profit that a company makes from its core business operations. It is calculated by subtracting operating expenses from sales.
  4. Other Income: This includes any income that the company earns from sources other than its main business operations, like interest earned, dividends, or rental income.
  5. Depreciation: This is an accounting method used to allocate the cost of a tangible asset over its useful life. It represents how much of an asset’s value has been used up over a period.
  6. Interest: This refers to the cost of borrowing money. It is the amount paid on loans or the amount earned on deposit funds.
  7. Profit before Tax: This is the profit earned by the company before any tax is deducted. It is calculated after subtracting all expenses, including interest and depreciation, from total revenue.
  8. Tax: This refers to the income tax that the company needs to pay on its profits.
  9. Net Profit: Also known as the bottom line, this is the profit after all expenses, including taxes, have been deducted from total revenue.
  10. EPS (Earnings Per Share): This measures the company’s profit divided by the outstanding shares of its common stock. It indicates how much money a company makes for each share of its stock.
  11. Price to Earning (P/E): This ratio measures a company’s current share price relative to its per-share earnings. It’s used to value a company’s shares.
  12. Price: This likely refers to the current trading price of the company’s stock.
  13. RATIOS:: This might be a section header in your document, under which various financial ratios are listed.
  14. Dividend Payout: This is the portion of net income that a firm pays out to its shareholders as dividends.
  15. OPM (Operating Profit Margin): This is a profitability ratio that shows what percentage of a company’s revenue is left over after paying for variable costs of production. It is a good indicator of the operational efficiency of the business

 

now with Examples we will learn that

 

 

  1. Sales:
    • Example: If a company sells 100 units of a product at ₹10 each, its sales would be ₹1,000.
  2. Expenses:
    • Example: Expenses might include ₹300 for materials, ₹200 for labor, and ₹100 for utilities, totaling ₹600.
  3. Operating Profit:
    • Example: With sales of ₹1,000 and expenses of ₹600, the operating profit would be ₹400.
  4. Other Income:
    • Example: If the company earns ₹50 in interest from a bank deposit, this is considered other income.
  5. Depreciation:
    • Example: If a machine bought for ₹10,000 is expected to last 10 years, its annual depreciation might be ₹1,000.
  6. Interest:
    • Example: If the company has a loan of ₹5,000 at an interest rate of 10%, the annual interest cost is ₹500.
  7. Profit before Tax:
    • Example: If the operating profit is ₹400, other income is ₹50, and interest is ₹500, the profit before tax is -₹50 (a loss).
  8. Tax:
    • Example: If the profit before tax is ₹400 and the tax rate is 25%, the tax would be ₹100.
  9. Net Profit:
    • Example: With a profit before tax of ₹400 and tax of ₹100, the net profit would be ₹300.
  10. EPS (Earnings Per Share):
    • Example: If a company with a net profit of ₹100,000 has 50,000 outstanding shares, its EPS is ₹2.00 per share.
  11. Price to Earning (P/E):
    • Example: If a company’s share price is ₹20 and its EPS is ₹2.00, the P/E ratio is 10.
  12. Price:
    • Example: The current trading price of a company’s stock might be ₹20 per share.
  13. Dividend Payout:
    • Example: If a company with a net profit of ₹100,000 pays out ₹25,000 in dividends, its dividend payout is 25%.
  14. OPM (Operating Profit Margin):
    • Example: If a company’s sales are ₹1,000 and its operating profit is ₹200, its OPM is 20%.

 

 

want to know in hindi

 

  1. Sales:
    • Udaharan: Agar ek company 100 products ₹10 prati ek ke rate se bechti hai, to uski kul bikri ₹1,000 hogi.
  2. Expenses:
    • Udaharan: Maan lijiye, company ke kharche mein ₹300 samagri par, ₹200 majdoori par, aur ₹100 utilities par aate hain, jo kul milake ₹600 bante hain.
  3. Operating Profit:
    • Udaharan: ₹1,000 ki bikri aur ₹600 ke kharche se, operating profit ₹400 hoga.
  4. Other Income:
    • Udaharan: Agar company ko bank deposit se ₹50 byaaj (interest) ke roop mein aamadani hoti hai, to yeh anya aay ke antargat aayega.
  5. Depreciation:
    • Udaharan: Agar ₹10,000 ki keemat ka ek machine 10 saal tak chale, to uski salana mulyahras (depreciation) ₹1,000 hogi.
  6. Interest:
    • Udaharan: Agar company ne ₹5,000 ka loan 10% byaaj dar se liya hai, to saal bhar ka byaaj ₹500 hoga.
  7. Profit before Tax:
    • Udaharan: ₹400 operating profit, ₹50 anya aay, aur ₹500 byaaj ke baad, kar se pehle ka munafa (profit before tax) -₹50 hoga (nuksan).
  8. Tax:
    • Udaharan: Agar kar se pehle ka munafa ₹400 hai aur tax ki dar 25% hai, to tax ₹100 hoga.
  9. Net Profit:
    • Udaharan: Kar se pehle ₹400 ka munafa aur ₹100 tax ke baad, shuddh munafa (net profit) ₹300 hoga.
  10. EPS (Earnings Per Share):
    • Udaharan: Agar ₹100,000 shuddh munafa wali company ke 50,000 shares hain, to EPS ₹2.00 prati share hoga.
  11. Price to Earning (P/E):
    • Udaharan: Agar kisi company ka share ka daam ₹20 hai aur uska EPS ₹2.00 hai, to P/E anupat 10 hoga.
  12. Price:
    • Udaharan: Company ke stock ka vartaman trading moolya ₹20 prati share ho sakta hai.
  13. Dividend Payout:
    • Udaharan: Agar ₹100,000 shuddh munafa wali company ₹25,000 dividend ke roop mein baantti hai, to uska dividend payout 25% hoga.
  14. OPM (Operating Profit Margin):
    • Udaharan: Agar kisi company ki ₹1,000 ki bikri se uska operating profit ₹200 hai, to uska OPM 20% hoga.

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