Chapter 13 · Financial Statements: the Balance Sheet
The asset side, line by line
Current versus non-current, and the lines where trouble hides.
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Assets are split by how quickly they turn into cash. Current means within a year. Non-current means longer.
| Line | What it is | What to watch |
|---|---|---|
| Cash and equivalents | Money, and things a few days from being money | Falling cash with rising profit is a warning |
| Accounts receivable | Sales made but not yet collected | Growing faster than revenue means collection is slipping |
| Inventory | Goods not yet sold | Rising while sales fall means stock is not moving |
| Property, plant, equipment | Land, buildings, machinery | The core of a hydropower or manufacturing company |
| Investments | Stakes in other entities | Common in Nepali holding structures |
| Goodwill | Paid above net assets in an acquisition | Not a real asset; can be written off suddenly |
| Intangible assets | Software, licences, brands | Valued by judgement, not by market |
| Deferred tax asset | Future tax relief already recognised | Only worth anything if there are future profits |
Working capital
Working capital = Current assets − Current liabilities. It is the money available to run day-to-day operations.
Negative working capital is not automatically bad — some businesses collect from customers before paying suppliers and run negative by design. But for most companies it means short-term obligations exceed short-term resources, and that has to be funded from somewhere.
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