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    Your understanding of the financial statement helps when computing financial metrics. For instance, when we calculate the return on assets, we know that we take the after-tax operating income from the income statement. We retrieve the average total assets from the balance sheet. Below, I am providing a brief balance sheet. 

    Assets = Liabilities + Owner’s Equity

    ASSETS

    Current Assets

      Cash

      Accounts Receivables

      Inventory

      Prepaid Expenses

    Long-Term Assets

      Land

      Building

      Machinery

      Equipment

    LIABILITIES

    Current Liabilities

      Accounts Payable

      Wages and Salaries Payable

      Taxes Payable

      Interest Payable

    Long-Term Liabilities

      Notes Payable

      Bonds Payable

    OWNERS EQUITY

    Beginning Balance

    Net Income

    Ending Balance

    How is the information in the brief balance sheet related to what you already know?

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