Chapter 1 - The Documents of Synthesis Definitions PDF

# Chapter 1 - The Documents of Synthesis ## Definitions The balance sheet is a table that presents the assets of a company at the close of the fiscal year or of an individual constituted by an asset and a liability. * **Asset** refers to what the company owns: fixed assets, current assets (inventor...

# Chapter 1 - The Documents of Synthesis ## Definitions The balance sheet is a table that presents the assets of a company at the close of the fiscal year or of an individual constituted by an asset and a liability. * **Asset** refers to what the company owns: fixed assets, current assets (inventory, accounts receivable, cash). * **Liability** refers to what the company owes: equity contributed by the owners, reserves accumulated by the company for its profits, debt from financial institutions, and operating debt. The balance sheet is clearly balanced (total assets = total liabilities). This method aims to evaluate the company's assets (what it owns) and subtract the value of its liabilities to obtain net equity, also called net worth. ### What is the difference between net equity and net income? * **Net equity** is the value of a company's assets minus its liabilities. It represents the overall value of the company to its owners. * **Net income** is the profit or loss that a company generates during a specific period. It represents the difference between the company's revenues and expenses. ## Methods of Valuation ### Comparable Companies Method The comparable companies method allows for the valuation of a company by comparing it to a sample of comparable businesses based on specific factors, such as revenue, profitability, and market cap. ## Assets ### Fixed Assets These are assets and receivables intended to be used permanently by the company. They are considered "fixed". ### Current Assets These are assets and receivables that will remain in the company for less than a year. They are considered "current". ## Capital This represents a long-term liability for a company toward its owners, resulting from the contributions (cash, in-kind, or industrial) they made during the company's formation. ## Results This refers to a profit or loss, and represents the company's liability to its owners as a result of profits during the current fiscal year. ## Reserves This represents a liability for the company toward its owners, comprised of accumulated profits since the company's inception that have not yet been distributed. ## Income Statement This summarizes the charges and products of the period, without taking into account the date of payment or collection. It describes the activities of the company during the current fiscal year. The difference between the charges and products represents the gain or loss. ### What are the differences among inventory, raw materials, and finished goods? * **Inventory**: Goods that the company buys for resale in the same state. * **Raw materials**: Objects and substances that are more or less developed and are intended to be included in the composition of the products processed or manufactured. * **Finished goods**: Objects and materials that are more or less developed that are consumed in the first use or rapidly and contribute to processing, manufacturing, and operations without being included in the composition. ### What is the difference between finished goods and products? * **Finished goods**: Have reached a final stage of completion in the manufacturing process. * **Products**: Products that have reached a final stage of completion in the exploitation, production, or service process.