Question

Why is it required to change the balance sheet structure?

Answer 1

by using following steps u can change balance sheet structure:-
Efficiency – By using the income statement in connection with the balance sheet it’s possible to assess how efficiently a company uses its assets.  For example, dividing revenue into fixed assets produces the Asset Turnover Ratio to indicate how efficiently the company turns assets into revenue. Additionally, the working capital cycle shows how well a company manages its cash in the short term.Rates of Return – The balance sheet can be used to evaluate how well a company generates returns. For example, dividing net income into shareholders’ equity produces Return on Equity (ROE), and dividing net income into total assets produces Return on Assets (ROA), and dividing net income into debt plus equity results in Return on Invested Capital(ROIC).