KCB’s balance sheet grew to KSh 2.1 trillion in Q3 2023 compared to Equity Group which reached KSh 1.7 trillion over the same period.
- •In 2022, Equity Group had the largest balance sheet size worth KSh 1.4 trillion compared to KCB whose balance sheet size was KSh 1.3 trillion.
- •Available Q3 2023 figures also show that KCB is followed by the NCBA had a balance sheet size of KSh 678.8 billion, I&M Group 544.1 billion, Absa Kenya 540.9 billion, Stanbic Kenya KSh 414.3 billion and StanChart Bank Kenya KSh 369.7 billion.
- •Co-op Bank Group’s balance sheet increased to KSh 661.3 billion in Q3 2023 compared to KSh 622.1 billion at the end of September 2022.
A balance sheet is one of several major financial statements you can use to track spending and earnings. Also called a statement of financial position, a balance sheet shows what your company owns and what it owes through the date listed. It displays this information in terms of a company’s assets, liabilities, and equity.
Assets are any items the business owns. Liabilities are payments the business needs to make. Equity is the amount the business’s shareholders own. On balance sheets, the assets are ideally equal to, or balance out, the liabilities and the equity.
There are two primary types of assets: current and noncurrent.
- •Current assets are items the business has acquired over time that will be used up or converted into cash within one year, or one business cycle, of the date on the balance sheet.
- •Prepaid insurance, accounts receivables, temporary investments, cash, inventories, and liabilities are considered current assets.
- •Noncurrent assets are any fixed assets or items the business owns. Things that fall into this category are office equipment, building property, land, long-term investments, stocks, and bonds.
Liabilities
Just like assets, there are current and noncurrent liabilities. Current liabilities represent payment obligations the company has to pay within 12 months of the date on the balance sheet. For example, an outstanding bill to an equipment supplier could be a current liability, as could salaries payable and income taxes payable.
Noncurrent liabilities are amounts the company has more than one year to pay. Bondholder and bank debt are considered noncurrent liabilities. One can identify the liabilities on balance sheets by looking for the word “payable.” Again, these liabilities are some of the sources of a company’s assets.
Another asset source is equity. If you are the sole proprietor of your business, this is referred to as owner’s equity. If your business is a corporation, equity is called stakeholder’s equity. When all liabilities are subtracted from your company’s assets, the result is equity.
- •Equity is made up of paid-in capital and retained earnings.
- •Paid-in capital is the amount each shareholder initially paid for his or her stock.
- •Retained earnings refers to the amount of money your business didn’t sell to shareholders and instead reinvested into itself.
It’s clear that balance sheets are critical documents because they keep business owners informed about the company’s financial standing. Many business owners fail to recognize their companies are in trouble until it’s too late. This is because some business owners aren’t examining their balance sheets.
- •Typically, if the ratio of your business’s assets to liabilities is less than 1 to 1, your company is in danger of going bankrupt, and you’ll have to make some strategic moves to improve its financial health.
- •Balance sheets are also important because these documents let banks know if your business qualifies for additional loans or credit.
- •Balance sheets help current and potential investors better understand where their funding will go and what they can expect to receive in the future.
Investors appreciate businesses with high cash assets, as this insinuates a company will grow and prosper. The balance sheet is a snapshot of a business’s financial records at a given date. The total of the owner’s equity is the book value of your business as at that date.
A balance sheet can help you identify trends in your business’s finances, particularly when it comes to relationships with customers and suppliers.
