Make a Balance Sheet Format in Excel

One of the three vital financial statements that depict a business’s financial position is the balance sheet. Consider it a snapshot of your financial statements at a given moment, listing all the dollars your business owns and all the debts you owe.

In preparing a balance sheet in Excel form, there are two important things you should know; this critical (or rather imperative) financial document (also known as a statement of financial position) is constructed around a simple and yet very effective equation, which happens to be the core of the matter: Assets = Liabilities + Shareholders Equity. 

By and large, the account of success in a simple balance sheet format in Excel is the absolute adherence to the precondition that the total amount of assets should always be equal to the amount of liabilities and equity. Luckily, Excel can calculate and format very well, and thus it is a leader in preparing and analyzing financial data.

In this step-by-step guide, we will lead you to making a professional balance sheet template in Excel to help you have a full perspective of the financial well-being of your company. In particular, we will discuss the principles of the structure of a balance sheet, proper preparation of your Excel sheet, and laying out your financial data so that it is as substantive and clear as possible. Okay, let us begin!

Learn or figure out the Balance Sheet System.

There is a significant need to learn the basic structure of a balance sheet prior to constructing one in Excel. Unlike other statements of the financial position, the balance sheet is a point-in-time key picture of your firm’s financial position and status. Learn or figure out the Balance Sheet System.

What can a balance sheet be used to do?

The balance sheet is a kind of financial report card that discloses what your firm possesses, what it owes, and what its worth is. The main purpose of business owners is to use balance sheets to determine the financial well-being of the business and make sound decisions in conducting business, investments, and opportunities to develop. Moreover, investors can use their balance sheets to calculate the net worth of a company and establish whether they can invest in it or not, whereas lenders rely on the balance sheets to determine whether to grant them credit or not.

In addition to fundamental financial analysis, balance sheets assist in the computation of such vital ratios as the debt to equity ratio, measures of liquidity, and the evaluation of the returns on assets. Such estimations give a better understanding of the efficiency of your company, its leverage, and the financial performance of your company.

The equation of the balance sheets is elaborated.

What drives every balance sheet format in Excel is the basic accounting equation:

Assets = Liability + Shareholders Equity

This equation should always be balanced-this is why we call it a balance sheet. That is to say, assets (things that your business possesses) should be equal to the amount of what your business is owing (debts) plus claims of the owners (equity).

To take an example, suppose your firm buys a bank-funded equipment worth $4,000, your assets list comes up by this amount and your debts come up by this amount, thus keeping the balance. Likewise, in case of investment in your company where the investors place investments totalling 8,000, there will be an equal increase in assets and shareholders’ equity.

Main elements: assets, liabilities, and equity

There are three main basic things that a simple balance sheet structure in Excel normally keeps in place:

1. Assets: Resources that your company possesses, which are valuable to the economy. These include:

• Current assets (liquid within 12 months): cash, merchandise, A/R
• Longer-term (non-current) assets: property, equipment, patents, trademarks

2. Liabilities: Money that your firm owes to other people (bills, debt service, etc.). These include:

• Current liabilities (payable within the year): accounts payable, wages, and short-term loans
• Non-current liabilities (payable after 1 year): the long-term debt, deferred tax

Equity: What is left after taking out liabilities to assets; it is the potential of the assets (the net worth). This is the owner’s ownership interest in the business and is comprised of contributed capital, retained earnings, and stock.

Logically organizing these components, as you compose a balance sheet template in Excel, will also result in an accurate and easily-readable financial report.

Prepare your Excel sheet.

So now that you know the concept of a balance sheet, we will go ahead and create the actual structure within Excel. Proper layout of your sheet will save you time and minimize the most common errors during the process of financial reporting.

Make period column heads.

To start with, leave an opening in an Excel worksheet, and make a title. Combine some cells at the top of it to make it prominent to read the balance sheet, and list the date of reporting below it. Then, organize your column strategy:

1. Column A can be reserved for item description and labelling,
2. Column B can be used as the current period of reporting.
3. Create column C (and other as necessary) comparative periods.

Properly format these columns just by selecting these columns and converting them to Accounting in the Number formatting menu. This automatically adds the dollar signs and the decimal points to keep it consistent. Also, give your header row a bold format so that it is distinctly seen against your data.

Label rows of every balance sheet item

Organize your balance sheet with clear hierarchical labels following this structure:

1. Assets (main header)
   • Current Assets (subheader)
   • Fixed Assets (subheader)
   • Other Assets (subheader)
2. Liabilities (main header)
   • Current Liabilities (subheader)
   • Long-term Liabilities (subheader)
3. Owner’s Equity (main header)

Insert line items under the various subheadlines that apply to your business. As an example, in Current Assets, put Cash, Accounts Receivable, Inventory, and Prepaid Insurance. In the meantime, there are Equipment and Long-term Investments that will be listed under Fixed Assets.

Automate totals by using formulas.

It is easy to maintain an accurate balance sheet within Excel as the calculation functions are evident within the spreadsheet. Put into operation these formulas:

In case of subtotals, apply the SUM function:=SUM(range). e.g., to compute Total Current Assets, assume your current assets are in cell range B7:B10, then it would be calculated using =SUM(B7:B10).

To put up the final totals, produce formulas that include the subtotals. Total Assets: =B11+B15+B19 (assuming these are the cells where you have your subtotals- Current Assets, Fixed Assets, and Other Assets). Above all, check your balance sheet by making sure that the Total Assets are equal to Total Liabilities plus Total Equity. You can make a formula to test it: =IF(TotalAssets=TotalLiabilitiesAndEquity, “Balanced”, “Error”).

It is a good idea that you maintain consistent formatting, which will aid in clarity. Use borders, shades, and fonts sparingly to make it more readable without making your Excel format for a balance sheet look cluttered.

Fill In the Balance Sheet Step-by-step

Once you have recreated the structure of your balance sheet in Excel, the most important step to complete is filling it with your financial facts. By correctly filling in all the sections, it would mean that your financial statement gives a real reflection of what is going on in the company.

Step 1: Current and Fixed Assets

Start by enumerating your assets, in liquidity ranking, in the ascending order of the most liquid assets first. It is important that you leave a column of space before entering dollar amounts in the cells beside your asset labels. Highlight all cells in the column in which you will enter the values and apply the “Accounting” format under the Number section of the home tab to automatically place the dollar sign and format the Decimal point. The first thing to do is to list all the current assets (cash, accounts receivable, inventory) that will be converted into cash in a year. 

Then you add non-current assets such as property, equipment, and intangibles. Enter the values directly in cells corresponding to each type of asset. Notably, assets that were fixed were not valued at the buying price; instead, they were valued at the current market value so as to factor in the depreciation.

Step 2: Include short and long-term debts

Let us go under liabilities (starting with those payable in less than a year). The previously mentioned items that are commonly omitted, i.e., taxes payable in arrears as well as wages paid a few days after the reporting date, should be considered. Just as in the case of assets, use an accounting format for these cells. Enumerate any current liabilities (account payables, short-term loans), then any long-term liabilities (long-term debt, deferred taxes). It is also recommended that you leave the cells adjacent to the word Total empty at first; we will enter the formulas in these in our next steps.

Step 3: Enter the values of equity

The elements in the equity section are mainly the common stock, preferred stock, and retained earnings. Key in the amount of finance shareholders have invested in your business. In the event that you have just conducted fundraising rounds, it is strongly advisable that you create individual equity accounts, per round. With retained earnings, enter the total amount of net income your firm has retained instead of sending out as dividends. This symbolizes the proceeds that are reinvested into the business in the long run.

Step 4: Make sure assets = Equity + Liabilities

Lastly, make sure that your balance sheet balances. To obtain subtotals and totals on each section, add formulas by entering the SUM formula. In my case, as an example, I typed =SUM and picked the cells holding my current assets to use them to calculate my total current assets. Sum up the values of current and fixed assets and make up the total assets. Similarly, add the current liabilities and that side of the equation. An accurate balance sheet reflects total assets that will equal the total liability and equity. When these values do not match, then check your entries again to see whether there is a mistake or omission.

These steps are organized and should be systematically followed to ensure that your balance sheet template in Excel will be correct in showing your financial position as of the reporting date of your company.

Format and Analyze your Excel Balance Sheet

Having input your balance sheet data, organisation, and good analysis are the important parts that should be used to get useful information. To enable the stakeholders to understand your company’s financial position within a very short time, producing a clean, free professional financial statement will be a good idea.

Apply formatting for clarity.

A balance on a sheet that has been formatted and set in Excel format is easily interpretable. One, align all the numbers on the right side so as to be able to compare the figures easily. Use accounting format (with currency symbols) only in row one and row n, and use comma format in the rows in between. Highlight totals with bold and underlining. Furthermore, more indentation is used to illustrate the hierarchy between the main categories and subcategories. As a result of it, your financial data gets immediately readable and professional.

Checks with Excel functions.

Make your balance sheet in Excel with error checks to make sure it is accurate. First of all, check that Assets = Liabilities + Equity according to the formula: =IF(ROUND( TotalAssets- TotalLiabilities-TotalEquity,5 )<> 0, “Error”, “Balanced”). Moreover, monitor important cells and formulas by means of the Watch Window in Excel. In case of complex calculations, step-by-step calculation processes are presented to debug calculations using the Evaluate Formula feature. Such checks will protect against invalid reasoning or computation mistakes.

Present trends using graphs.

Visualization enables one to interpret raw numbers into something meaningful. Make pie charts that show the distribution of assets or liabilities. Bar charts are effective in comparing the various categories over time, and the line charts make the focus on the aspect of equity throughout the time. Thus, these images make it easier to establish patterns as well as explain the financial health better than raw figures.

Key Takeaways

Get up to speed on learning how to professionally prepare balance sheets in Excel and have a clear view of how your business is doing, and make sound decisions in your business.

1. Learn the equation of the balance sheet: Assets should always be equal to Liabilities + Equity – use of an Excel formula to assure this key balance.

2. methodically organize your Excel sheet: Have well-defined column headings of periods, have rows in hierarchy, and have automated calculation using SUM formulas.

3. Input liquidity-wise: Put first current assets, then fixed, current, and long-term obligations in liquidity and correct market values.

4.Put on professional formatting: Format currency using an accounting formula, bold your totals, indent subcategories, and apply an error checking formula to manage accuracy.

5.Use the analytical capabilities of Excel: Create graphs to display financial trends and built-in functionality such as Watch Window to track high-priority calculations.

Once it is well done, your Excel balance sheet is much more than a financial statement; your Excel balance sheet turns into an analytical Swiss army knife to determine the exact financial picture of your company and provide strategic guidance on the strategy of your company.