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Balance sheet analysis

20 September 2016

Hello to All,

Please clarify my doubt... Can the Assest and Liabilities Totals for the current year can be less than previous years Totals?? Below is the scenario

2014-15 2013-14

Total Assets 108 120

Total Liabilities 108 120

If the above is true in what cases the totals will decrease???

If the above is false why?

Thank you very much for your time and support

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8 Replies

Rama chary Rachakonda (Master in Accounts & Lawyer email ID:ramachary64@gmail.com voice no:9989324294) (3303 Points)
Replied 20 September 2016

some assets might have solve to clear the liabilities in the current year.

Gopal singhal (ca) (119 Points)
Replied 20 September 2016

Yes it may be possible.
There might be various circumstances in which the figure of current year balance sheet can be lower than figures of last year balance sheet.
For e.g. Reduction in current liabilities, or in the previous year more fixed assets were purchased

Noshin (none) (29 Points)
Replied 20 September 2016

assume debtors for 13-14 is Rs. 12 and loans (liability) is Rs. 20 for fy 13-14 . now in fy 14-15 you realise the money Rs. 12 from debtors and you repay Rs. 12 loan . so now the debtor balance in fy 14-15 will be Rs. 0 and loan balance will be Rs. 8. this is one example. there can be innumerable examples for this case like capital withdrawal, loss in business, creditors repayment , etc.

(Guest)

May be .. buy back..? assest side cash decrease... liability side capital decrease... ASSUME remaining all r constant😉

suryaprakash (nil) (47 Points)
Replied 20 September 2016

yes, that's not a big matter and it's 100% possible...even if the company doesn't have any operations...just for the impact of depreciation both assets and liabilities total can come down...

C.A Tarun Shah (practice) (271 Points)
Replied 20 September 2016

Decrease in assets & Liabilities mainly depends on cash flow of the Enterprise

CA PALLAVI GUPTA (Professional) (592 Points)
Replied 21 September 2016

Yes, it is possible. There may be increment as well as decrement in the value of Asset & Liabilities in current year then last year. It depends upon the transactions of the business. There can be numerous reasons for the same for ex; Depreciation, Repayment of Loan, Purchase/Sale of Property, Payment to debtor etc. You need to analyse the reason and accuracy for the same.

Dhaval Doshi (Manager - Finance & Accts) (23 Points)
Replied 22 September 2016

Dear Karthika,

Yes, this is possible, there are no. of reasons...

1. If there is no change in balance sheet compared to previous year, current year depreciation will impact decrease Asset as well as Liabilities in your example if depreciation is Rs.12.

2. If there are changes in balance sheet compared to previous year, both any assets (e.g. debtors) & liabilities (e.g. creditors) decreases by Rs.12/-

So if you have complete balance sheet you will analyze where is increase / decrease.

Regards,

Dhaval