A snapshot of the business’ assets (what it owns or is owed) and its liabilities (what it owes) on a particular day

Required by any limited liability company


  • Current assets (yours for less than a year)
  • Non-current assets


  • Current liabilities (must be paid back within a year)
  • Non-current liabilities

Total equity: Capital raised from share sales + retained profit


Current Assets

  • Can be quickly liquidised to pay bills etc

  • Cash

  • Trade Creditor (receivables)

  • Inventories (stock)

Non-current Assets

  • Land & buildings
  • Plant & Machinery
  • Goodwill (intangible asset)
    • Brand etc


Current liabilities

  • Trade creditor (Payables)
  • Short-term borrowings

Non-current liabilities

  • Long-term borrowings
  • Other long-term liabilities

Net position

Net assets = Total assets (value £) - Total liabilities (value £)

Other formulae

Total assets = current assets + non-current assets

Total liabilities = current liabilities + non-current liabilities

Working capital = current assets – current liabilities

Total equity = share capital + reserves

Working Capital

  • Also called net working capital

  • Is a measure of a company’s liquidity and short-term financial health

  • The difference between a company’s current assets and current liabilities

  • A positive NWC indicates that a company can fund its current operations and may be able to invest in future activities and growth.

  • Too much working capital is wasteful

    • You are holding assets that won’t make a return, invest the excess