Chapter 4 · Day 4 — The balance sheet
Reading a balance sheet
Everything owned was paid for by a lender or an owner. Which one dominates decides how much risk the shareholder carries.
The identity never breaks: Assets = Liabilities + Shareholders' Equity. Every rupee of resource was funded either by someone the company must repay, or by its owners.
What a balance sheet balances
| Side | Contains | Read it for |
|---|---|---|
| Current assets | Cash, receivables, inventory | Can it pay this year's bills? |
| Non-current assets | Property, plant, investments, intangibles | What the business is built on |
| Current liabilities | Payables, short-term borrowing | What is due within a year |
| Long-term debt | Term loans, debentures | The structural risk |
| Equity | Share capital, reserves, retained earnings | What the owners have built up |
Working capital
Working Capital = Current Assets − Current Liabilities. It is the buffer between what comes due this year and what is available to meet it.
| Illustrative Example | Rs '000 |
|---|---|
| Current assets | 48,000 |
| Current liabilities | 31,000 |
| **Working capital** | **17,000** |
Book value per share
BVPS (प्रति शेयर किताबी मूल्य) = Shareholders' Equity ÷ Shares Outstanding. With equity of Rs 82,80,00,000 and 90,00,000 shares: BVPS = Rs 92.00. This is the denominator of P/B, which is the main valuation ratio for Nepali banks.
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