A **Balance Sheet **is one of the most important financial documents that a company produces. It provides a snapshot of a company’s assets, liabilities, and equity at a particular point in time. The balance sheet can give you insights into a company’s financial strength, as well as its ability to pay its debts. The balance sheet is also important for investors. By looking at a **company’s balance sheet**, you can get an idea of its financial health and whether or not it is a good investment. You can also use the balance sheet to compare companies in the same industry. There are different kinds of balance sheets. One of a kind is **Provision Balance Sheet**. In this article, I will try to explain every details on **how to Create Provision Balance Sheet Format in Excel**. I hope it will be a very helpful article if you are searching to find a way to create a provision balance sheet in **Microsoft Excel**.

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## Introduction to Provision Balance Sheet

A **Provision balance sheet **is a type of balance sheet that is used to provide an initial snapshot of a company’s financial position. This balance sheet is typically prepared at the beginning of a new accounting period, before any actual transactions have taken place.

The purpose of a Provision balance sheet is to give management and investors an early look at the company’s financial health. This information can be used to make decisions about how to allocate resources and make other strategic decisions.

## Step by Step Procedure to Create Provision Balance Sheet Format in Excel

In order to create a Provision balance sheet, we need to know two major factors. They are:

- Assets
- Liabilities & Owner’s Equity

__Assets__

An **asset **is anything that can be converted into cash. It can be cash itself, or something that can be sold to generate cash.

__Liabilities__

**Liabilities **are items you owe money for or have borrowed. It is recorded on the company’s balance sheet and appears as a negative number. Either **present** or **long-term** liabilities exist. Long-term liabilities are those that are not due for another calendar year, whereas current liabilities are those that are.

__Owner’s Equity__

**Owner’s equity **mostly refers to the shareholders’ portion of the company’s value. This is the proportional distribution of the company’s worth in the event of a sale.

So, in order to create a Provision balance sheet, we can divide the whole procedure into three major sections.

- Assets Calculation
- Liabilities Calculation
- Owner’s Equity Calculation
- Verifying Balance Sheet
- Financial Summary from Balance Sheet

__Final Results from A Provision Balance Sheet__

There are mainly 5 financial results we can get from a Provision balance sheet.

**Debt Ratio**: This is the ratio between total liabilities and total assets.

**Current Ratio**: This is the ratio between current assets and current liabilities.

**Working Capita**l: This is the difference between current assets and current liabilities.

**Assets to Equity Ratio**: This is the ratio between total assets and owner’s equity.

**Debt to Equity Ratio**: This is the ratio between total liabilities and owner’s equity.

### Step 1: Assets Calculation

Assets calculation can be considered as the first step to create a Provision balance sheet. You just need to follow the following procedure to calculate assets.

** Steps**:

- Firstly, input the necessary parameters along with the values related to the current assets.

- Next, calculate the
**Total Current Assets**using the following formula:

`=SUM(E6:E9)`

- Press
**ENTER**to have the**Total Current Assets**.

- Furthermore, add the additional assets.
- Calculate the
**Total Assets**applying the following formula:

`=SUM(E10:E12)`

- Finally, press
**ENTER**to have the**Total Assets**.

**Read More:** **How to Make Profit and Loss Account and Balance Sheet in Excel**

### Step 2: Liabilities Calculation

As the continuation of the Provision balance sheet creation, we need to calculate the total liabilities. The steps are mentioned below:

** Steps**:

- Write down the necessary parameters along with the values related to the current liabilities.

- Next, input the following formula to calculate the
**Total Current Liabilities**.

`=SUM(E17:E19)`

- Hit
**ENTER**to have the**Total Current Liabilities**.

- Along with that, add the other parameters related
**Total Liabilities**. - Then, apply the following formula to have the
**Total Liabilities**.

`=SUM(E20:E22)`

- Press
**ENTER**to have**Total Liabilities**.

**Read More:** **Create a Balance Sheet Format for Trading Company in Excel**

### Step 3: Owner’s Equity Calculation

After that, find the **Owner’s Equity Calculation **using the following procedure.

** Steps**:

- Firstly, write down the necessary parameters along with the values related to the
**Owner’s Equity**.

- After that, input the following formula to have the
**Total Owner’s Equity**.

`=SUM(E26:E27)`

- As a finishing step, press
**ENTER**to have the desired result.

**Read More:** **Balance Sheet Format in Excel for Proprietorship Business**

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### Step 4: Verifying Balance Sheet

According to balance sheet rule, the summation of **Liabilities **and **Owner’s Equity **should be equal to **Assets**. In order to verify this, follow the procedures mentioned below.

** Steps**:

- Find the total value of
**Liabilities**and**Owner’s Equity**. For this, use the following formula:

`=SUM(E23,E28)`

Here,**
E23** =

**Total Liabilities**

E28=

E28

**Total Owner’s Equity**

- Press the
**ENTER**button to have the output.

- Now, check if the value satisfies the following equation.

**Assets = Liabilities + Owner’s Equity**

**Read More:** **Create a Format of Balance Sheet of Partnership Firm in Excel**

### Step 5: Financial Summary from Balance Sheet

Now, Calculate the Financial Parameters to summarize the whole balance sheet.

** Steps**:

- To calculate
**Debt Ratio**, use the formula:

`=E23/E13`

Here,**E23 **= **Total Liabilities
E13 **=

**Total Assets**

- To calculate
**Current Ratio**, input the following formula:

`=E10/E20`

Here,**E10 **= **Current Assets
E20 **=

**Current Liabilities**

- To calculate
**Working Capital**, input the following formula:

`=E10-E20`

Here,**E10 **= **Current Assets
E20 **=

**Current Liabilities**

- To calculate
**Assets to Equity Ratio**, input the following formula:

`=E13/E28`

Here,**E13 **= **Total Assets
E28 **=

**Owner’s Equity**

- Apply the following formula to calculate
**Debt to Equity Ratio**:

`=E23/E28`

Here,**E23 **= **Total Liabilities
E28 **=

**Owner’s Equity**

**Read More:** **How to Make Automatic Balance Sheet in Excel**

## Provision Balance Sheet Format

In the following section, I have created a format for creating a Provision balance sheet of a company. Just input the necessary format to have a Provision balance sheet.

## Conclusion

At the end of this article, I like to add that I have tried to explain every details on **how to create Provision Balance Sheet Format in Excel**. It will be a matter of great pleasure for me if this article could help any Excel user even a little. For any further queries, comment below. You can visit our site for more articles about using Excel.

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