How to Create Provision Balance Sheet Format in Excel

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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:

  1. Assets
  2. 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.

  1. Assets Calculation
  2. Liabilities Calculation
  3. Owner’s Equity Calculation
  4. Verifying Balance Sheet
  5. 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 Capital: 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.

Provision Balance Sheet Format in Excel

  • Next, calculate the Total Current Assets using the following formula:
=SUM(E6:E9)

Assets Calculation

  • Press ENTER to have the Total Current Assets.

  • Furthermore, add the additional assets.
  • Calculate the Total Assets applying the following formula:
=SUM(E10:E12)

Provision Balance Sheet Format in Excel

  • 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.

Liabilities Calculation

  • Next, input the following formula to calculate the Total Current Liabilities.
=SUM(E17:E19)

  • Hit ENTER to have the Total Current Liabilities.

Provision Balance Sheet Format in Excel

  • 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.

Provision Balance Sheet Format in Excel

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.

Owner’s Equity Calculation

  • 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.

Provision Balance Sheet Format in Excel

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
= Total Owner’s Equity

Verifying Balance Sheet

  • Press the ENTER button to have the output.

  • Now, check if the value satisfies the following equation.
Assets = Liabilities + Owner’s Equity

 Provision Balance Sheet Format in Excel

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

Financial Summary from Balance Sheet

  • To calculate Current Ratio, input the following formula:
=E10/E20

Here,
E10 = Current Assets
E20
= Current Liabilities

Provision Balance Sheet Format in Excel

  • 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

Provision Balance Sheet Format in Excel

  • Apply the following formula to calculate Debt to Equity Ratio:
=E23/E28

Here,
E23 = Total Liabilities
E28
= Owner’s Equity

Provision Balance Sheet Format in Excel

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.

Provisional Balance Sheet Format


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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Naimul Hasan Arif
Naimul Hasan Arif

Hello, I am Arif. I am an Engineer who graduated from BUET. I want to pursue an enterprising career in a progressive environment where my skills & knowledge can be enhanced to their maximum potential to contribute to the overall success and growth of the organization.

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