Excel Templates for Balance Sheet Management

A balance sheet is a financial statement that shows a business's assets, liabilities, and equity at a specific point in time. It provides a snapshot of what the company owns and owes, and the residual interest of the owners. To effectively track your financial health, it's crucial to update and review balance sheets regularly.

Creating a balance sheet manually in Excel each time can be labor-intensive and prone to errors. Instead, using pre-designed Excel templates can accelerate this process.

These templates are designed to let you input and organize your data quickly, saving you time and ensuring greater accuracy in your financial reporting. Using these templates can simplify your balance sheet creation, making it easier to maintain a clear and consistent overview of your business's financial standing.

To know the definition and more details about balance sheet, read this Balance Sheet guide.

Balance sheet equation

Every balance sheet is based on a fundamental equation.

Assets = Liability + Equity

Accurate balance sheets ensure compliance with accounting standards and regulations, promoting transparency. Regular updates allow companies to track financial progress, identify trends, and improve areas of weakness.

By maintaining this equation, businesses ensure their financial statements accurately reflect their economic reality, fostering better management and strategic planning.

Here is an example of how this equation works:

Consider a company that obtains a five-year loan of $5,000 from a bank. Here's how the balance sheet is affected:

Assets:

Cash increases by $5,000 due to the loan.

Liabilities:

A new liability of $5,000 is recorded for the loan.

In this case, the financial equation Assets = Liabilities + Equity remains balanced:

Before the Loan:

• Assets: $20,000
• Liabilities: $10,000
• Equity: $10,000

After the Loan:

• Assets: $20,000 (previous) + $5,000 (loan) = $25,000
• Liabilities: $10,000 (previous) + $5,000 (loan) = $15,000
• Equity: $10,000 (unchanged)

Assets = Liabilities + Equity

$25,000 = $15,000 + $10,000

The balance sheet remains balanced.

Similarly, if the company receives $5,000 from investors, its financials will adjust as follows:

Assets:

Cash increases by $5,000.

Equity:

Shareholder equity increases by $5,000.

Before Investment:

• Assets: $20,000
• Liabilities: $10,000
• Equity: $10,000

After Investment:

• Assets: $20,000 (previous) + $5,000 (investment) = $25,000
• Liabilities: $10,000 (unchanged)
• Equity: $10,000 (previous) + $5,000 (investment) = $15,000

Assets = Liabilities + Equity

$25,000 = $10,000 + $15,000

Again, the balance sheet is balanced. Any profits generated beyond expenses will be added to the shareholder equity account. These profits will be reflected as an increase in assets, such as cash or inventory.

Assets in the balance sheet

Assets are what your business owns that have value. They are divided into two categories: current assets and non-current assets.

Current Assets

These are short-term assets you can convert into cash within one year. They include cash, money owed to you (accounts receivable), and items you have for sale (inventory).

Non-Current Assets

These are long-term assets that you can’t quickly turn into cash.

Examples of assets:

• Cash or money available at the moment
• Accounts receivable or money customers owe you
• Inventory ready to be sold
• Property, Plant, and Equipment (PP&E)

Liabilities in the balance sheet

Liabilities are what your business owes to others. They are classified into current liabilities and non-current liabilities.

Current Liabilities

These are short-term debts that you need to pay within one year. Examples include bills you owe (accounts payable) and short-term loans.

Non-Current Liabilities

These are long-term debts due after one year. Examples include long-term loans and bonds payable.

Equity in the balance sheet

The shareholder's equity section of a company's balance sheet reflects the value of the funds that shareholders have invested in the company, along with the retained earnings.

Retained earnings are essentially the portion of net income that is kept within the company rather than being distributed as dividends to shareholders. The formula to calculate Shareholders' Equity is:

Shareholders' Equity = Total Assets – Total Liabilities

This equation highlights that shareholder equity represents the residual value of the company's assets after all liabilities have been subtracted. It includes both the capital invested by shareholders and any accumulated retained earnings.

By understanding these parts of the balance sheet, you can see a clear picture of your business’s financial health.

Creating a balance sheet using Excel

Now that you understand the components of a balance sheet, let's walk you through the step-by-step process to ensure your balance sheet is accurate, clear, and up-to-date.

Step 1: Set up your spreadsheet

Open a new Excel workbook and name the worksheet “Balance Sheet.” Create headers for “Assets,” “Liabilities,” and “Equity.” Add subheadings like “Current Assets” and “Long-term Liabilities” for better organization.

Step 2: Pick the balance sheet date

Choose a specific date for your balance sheet, typically the last day of the quarter (March, June, September, December) or the month if you prepare monthly reports.

Step 3: List all of your assets

Start by listing all your current assets (cash, accounts receivable) in order of liquidity. Follow this with non-current assets (property, equipment), ensuring you include both monetary and non-monetary assets.

Step 4: Add up all of your assets

Sum up all the assets listed to get the total asset value. Verify this total against the company’s general ledger for accuracy.

Step 5: Determine current liabilities

List all liabilities due within a year, such as accounts payable, short-term notes payable, and accrued liabilities.

Step 6: Calculate long-term liabilities

Identify liabilities that extend beyond one year, like long-term loans, bonds payable, pension plans, and mortgages.

Step 7: Add up liabilities

Combine the totals of current and long-term liabilities to find the overall liabilities value.

Step 8: Calculate owner’s equity

Calculate retained earnings (profits reserved for reinvestment) and total shareholders’ equity (share capital plus retained earnings).

Step 9: Verify the balance

Ensure that the sum of liabilities and owner’s equity equals total assets. If it doesn’t, review and correct any discrepancies.

By following these steps and maintaining regular updates, you’ll have a comprehensive and insightful view of your business’s financial health, enabling you to make informed and strategic decisions.

For a quicker solution, you can use Ramp’s pre-made balance sheet template to streamline the process. Download now!

Also, if you want a balance sheet template in word document format, download this template.

Benefits of using balance sheet template

Using a balance sheet template makes financial reporting easier and more accurate. Here are the key benefits:

• Shows your assets, liabilities, and equity, giving you a clear view of your financial health.
• Helps you make informed business decisions by highlighting financial trends and patterns.
• Makes it easy to track your company's financial performance over time, identifying strengths and weaknesses.
• Provides clear information for investors, creditors, and stakeholders, building trust in your business's stability.
• Helps you plan and allocate resources effectively by highlighting financial priorities.
• Identifies financial risks and areas needing improvement, helping you take proactive measures.

These benefits help you manage your finances better, giving you a clear and comprehensive view of your business’s financial status.

Using Ramp to simplify balance sheet creation

Creating a balance sheet is a simple way to organize and track your financial information. By following our step-by-step guide and using our best practices, you can create a detailed balance sheet that helps you understand your financial position and make informed decisions or simply download the template created by Ramp for your use.

Ramp simplifies the balance sheet creation process and accelerates month-end book closing. Here’s how Ramp helps:

• Ramp automates expense reporting, ensuring accuracy and saving you valuable time.
• With Ramp’s platform integrated into your card, you get instant visibility into your spending.
• Ramp allows you to monitor expenses as they happen, keeping your financial data up-to-date and accurate.

Ramp streamlines your financial processes, reduces errors, and makes your month-end close faster and more efficient! Optimize your financial process with Ramp today!