In every business, it’s a most important task to make the balance sheet every year. Making the balance sheet is more or less the same for every business. So, the balance sheet format for a construction company is nothing different from the other balance sheet. In this tutorial, we’ll show you the easiest way to make a balance sheet format for a construction company in Excel with an organized dataset.
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What Is a Balance Sheet?
In financial calculation, a balance sheet is a financial statement at a specific point in time that shows the details of a company’s assets, liabilities, or shareholders’ equities. On the other hand, we can say it is the detailed income and expenditure over the preceding period. Among the three major financial statements, it is one of them along with the income statement and the cash flow statement which are used to evaluate the performance of a business.
Steps to Make a Balance Sheet Format for Construction Company in Excel
Here’s the basic format for the balance sheet of a construction company. In the Assets section, it has three-part and in the Liabilities section, it has also three parts. Now we’ll insert the corresponding amounts in the section and will calculate the total assets and liabilities to fulfill the format.
Step 1: Insert Current Assets
First, we’ll insert the amount for the current assets. A current asset is a term on a company’s balance sheet which might be cash, equivalent to cash, or something that can be converted into cash within a year. In our format, this section has 6 terms- Cash, Certificate of deposit, Account receivable, Short-term investments, Inventory, and Prepaid expenses.
These assets are added just for example purposes, if you have more current assets then feel free to add in this part. Now insert the corresponding amount for each term.
Step 2: Insert Net Property and Equipment
Shortly it is called the Net PP&E, which means all kinds of physical assets that a company buys like lands, buildings, furniture, and electric equipment to run a business. It is actually a non-current asset. We inserted a total amount for this section. If you have different parts then add them under this section.
Step 3: Insert Other Assets
Next, insert the other assets like Income tax and other taxes, etc.
Step 4: Calculate Total Assets
Different sections for the assets are inserted, now we’ll calculate the total assets by using the SUM function. After getting the total assets, we’ll be able to compare them with the liabilities. So, insert the following formula in Cell C16 and hit the ENTER button-
Step 5: Insert Current Liabilities
The debts or obligations that will have to pay to creditors within one year are called a company’s current liabilities. We inserted different current liabilities here like Account payable, Income tax payable, Short-term loans, etc. Then inserted the corresponding values of them.
Step 6: Insert Long-Term Liabilities
Long-term liabilities are also known as long-term debts. It is the debts that a company owes third-party creditors that have to pay beyond 12 months. This difference from the current liabilities is, a company must pay current liabilities within 12 months. Here, we inserted the amounts for the Long-term debt, Income tax, and other debts.
Step 7: Calculate Total Liabilities
At this moment, we’ll calculate the total liabilities by adding the Current liabilities and Long-term liabilities using the SUM function again. So, insert the following formula in Cell E14 and press the ENTER button-
Step 8: Insert Stockholder’s Equity
It is the asset amount that is remaining in a business after settling all the liabilities. We can calculate it as the capital which is given to a business by the company’s shareholders, along with the donated capital and other earnings achieved by different operations of the business. We inserted the total shareholders’ equity amount in Cell E15.
Step 9: Calculate Total Liabilities and Equity
Before comparing with the total assets we’ll have to find the total liabilities and equity by adding Stocholder’s equity and Total liabilities. For that, we’ll take the help of the SUM function of Excel. In Cell E16, write the following formula and hit the ENTER button-
For a perfect balance sheet, the total amount of assets and liabilities will be the same. We are seeing that the total assets and total liabilities matched, which means there’s no mistake in our calculation.
Why Do We Need a Balance Sheet?
- The interested parties can have an idea about the company by seeing its balance sheet to take decisions for investment.
- It helps the bank to take decisions for giving a loan by analyzing the company’s financial ability. If the balance sheet qualifies then the bank gets agreed to give loans.
- The balance sheet helps to determine the risk and returns of a company.
- A balance sheet helps to calculate the other useful ratios for other financial calculations.
That’s all for the article. I hope the procedures described above will be good enough to make a balance sheet format for a construction company in Excel. Feel free to ask any question in the comment section and please give me feedback.