In financial accounting, a balance sheet is a summary of the financial balances of an individual or organization, whether it be a sole proprietorship, a business partnership, a corporation, private limited company or other organization such as government or not-for-profit entity. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A balance sheet is often described as a "snapshot of a company's financial condition". Of the four basic financial statements, the balance sheet is the only statement which applies to a single point in time of a business' calendar year.
Public finance is the study of the role of the government in the economy. It is the branch of economics that assesses the government revenue and government expenditure of the public authorities and the adjustment of one or the other to achieve desirable effects and avoid undesirable ones. The purview of public finance is considered to be threefold, consisting of governmental effects on:
- The efficient allocation of available resources;
- The distribution of income among citizens; and
- The stability of the economy.
Net worth is the value of all the non-financial and financial assets owned by an individual or institution minus the value of all its outstanding liabilities. Since financial assets minus outstanding liabilities equal net financial assets, net worth can also be conveniently expressed as non-financial assets plus net financial assets. It can apply to companies, individuals, governments or economic sectors such as the sector of financial corporations or to entire countries.
External debt is the total debt which the residents of a country owe to foreign creditors; its complement is internal debt, which is owed to domestic lenders. The debtors can be the government, corporations or citizens of that country. The debt includes money owed to private commercial banks, foreign governments, or international financial institutions such as the International Monetary Fund (IMF) and World Bank. Note that the use of gross-liability figures greatly distorts the ratio for countries which contain major money-centers, such as the United Kingdom due to London's role as a financial capital.
Government debt, also known as public interest, public debt, national debt and sovereign debt, contrasts to the annual government budget deficit, which is a flow variable that equals the difference between government receipts and spending in a single year. The debt is a stock variable, measured at a specific point in time, and it is the accumulation of all prior deficits.
In finance, leverage is any technique involving using debt rather than fresh equity in the purchase of an asset, with the expectation that the after-tax profit to equity holders from the transaction will exceed the borrowing cost, frequently by several multiples — hence the provenance of the word from the effect of a lever in physics, a simple machine which amplifies the application of a comparatively small input force into a correspondingly greater output force. Normally, the lender will set a limit on how much risk it is prepared to take and will set a limit on how much leverage it will permit, and would require the acquired asset to be provided as collateral security for the loan.
Off-balance sheet (OBS), or incognito leverage, usually means an asset or debt or financing activity not on the company's balance sheet. Total return swaps are an example of an off-balance sheet item.
The net international investment position (NIIP) is the difference between the external financial assets and liabilities of a country. External debt of a country includes government debt and private debt. External assets publicly and privately held by a country's legal residents are also taken into account when calculating NIIP. Commodities and currencies tend to follow a cyclical pattern of significant valuation changes, which is also reflected in NIIP.
Modern Monetary Theory or Modern Money Theory (MMT) is a heterodox macroeconomic theory that describes currency as a public monopoly and unemployment as evidence that a currency monopolist is overly restricting the supply of the financial assets needed to pay taxes and satisfy savings desires. MMT is an alternative to mainstream macroeconomic theory. It has been criticized by well-known economists but is claimed by its proponents to be more effective in describing the global economy in the years following the Great Recession of 2007–2009.
The following outline is provided as an overview of and topical guide to finance:
Flow of funds accounts are a system of interrelated balance sheets for a nation, calculated periodically. There are two types of balance sheets: those showing
A flight-to-quality, or flight-to-safety, is a financial market phenomenon occurring when investors sell what they perceive to be higher-risk investments and purchase safer investments, such as gold and other precious metals. This is considered a sign of fear in the marketplace, as investors seek less risk in exchange for lower profits.
The Ministry of Finance of Chile is the cabinet-level administrative office in charge of managing the financial affairs, fiscal policy, and capital markets of Chile; planning, directing, coordinating, executing, controlling and informing all financial policies formulated by the President of Chile.
In financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything that can be utilized to produce value and that is held by an economic entity and that could produce positive economic value. Simply stated, assets represent value of ownership that can be converted into cash . The balance sheet of a firm records the monetary value of the assets owned by that firm. It covers money and other valuables belonging to an individual or to a business.
In financial accounting, a liability is defined as the future sacrifices of economic benefits that the entity is obliged to make to other entities as a result of past transactions or other past events, the settlement of which may result in the transfer or use of assets, provision of services or other yielding of economic benefits in the future.
Canadian government debt, also called Canada's "public debt", is the liabilities of the government sector. For 2019, total financial liabilities or gross debt was $2434 billion for the consolidated Canadian general government . This corresponds to 105.3% as a ratio of GDP . Of the gross debt, $1145 billion or 47% was federal (central) government liabilities . Provincial government liabilities comprise most of the remaining liabilities.
The Australian government debt is the amount owed by the Australian federal government. The Australian Office of Financial Management, which is part of the Treasury Portfolio, is the agency which manages the government debt and does all the borrowing on behalf of the Australian government. Australian government borrowings are subject to limits and regulation by the Loan Council, unless the borrowing is for defence purposes or is a 'temporary' borrowing. Government debt and borrowings have national macroeconomic implications, and are also used as one of the tools available to the national government in the macroeconomic management of the national economy, enabling the government to create or dampen liquidity in financial markets, with flow on effects on the wider economy.
The credit channel mechanism of monetary policy describes the theory that a central bank's policy changes affect the amount of credit that banks issue to firms and consumers for purchases, which in turn affects the real economy.
An asset-backed commercial paper program is a non-bank financial institution that issues short-term liabilities, commercial paper called asset-backed commercial paper (ABCPs), to finance medium- to long-term assets.
The national debtof the People's Republic of China is the total amount of money owed by the central government, local governments, government branches and state organizations of China. As of 2020, China’s total government debt stands at approximately CN¥ 46 trillion, equivalent to about 45% of GDP. Standard & Poor's Global Ratings has stated Chinese local governments may have an additional CN¥ 40 trillion in off-balance sheet debt. Furthermore, debt owed by state-owned industrial firms is another 74% of GDP according to the International Monetary Fund. The three government-owned banks owe a further 29% of GDP. The high debt level is a current economic issue facing China.
