Ideally, information from the balance sheet helps users of financial statements to: i. To evaluate the capital structure of the enterprise ii. To assess the liquidity as well financial flexibility and capability of the enterprise. iii.To compute the rates of return.
Work Step by Step
Its important to note that, the balance sheet provides information regarding the nature as well the amounts of investments of a given enterprise, its resources, the obligation of the enterprise to its creditors, as well the owner's equity in net enterprise resources. Such information is always crucial to it users since it not only complements the enterprise but also contributes to the financial reporting of the enterprise.