3. The Balance Sheet: If Your People Are Your Most Important Asset, Where Do They Show Up on the Balance Sheet?

If you want to calculate your personal net worth, you subtract from the value of everything you own the value of everything you owe. No matter how complex a corporation may be, its balance sheet is nothing more than that, a list of everything the company owns (assets) minus the list of everything the company owes (liabilities). Although you could describe the difference between these two quantities as a corporation’s net worth, the standard accounting terminology for the excess of assets over liabilities is owners’ equity or shareholders’ equity. A corporation with assets of $5 billion and liabilities of $3 billion would calculate its ...

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