Follow All Your Important Value


Businesses and professionals know that they cannot run their company without realizing its financial status. Similarly, when it comes to developing a comprehensive financial system, they also need a framework to monitor their financial performance.

A “Life Certificate”[1] provides a complete overview of the owners’ financial situation, its challenges and its overall value. Although similar to the experimental paper used to evaluate their company, the Life Balance Sheet also includes real and debt-free items.

The left-hand side of the paper lists the assets of the owners and combines traditional assets (money, stocks, bonds, other items, etc.) with other tangible assets (real estate, metals, art supplies, and more). You are also meaning but to wait metal.

Stored goods are non-liquid goods that are usually not sold but have a value. In a previous article, this was called “Human Capital.” Although often overlooked, Human Capital represents the benefits that its owner expects.

Credits, to the right of the paper, should be considered the same. Mortgage mortgages, business loans and other securities securities and loans are clear. In addition, business owners and potential employers should incorporate their succession goals as the mean mean and professional retirees and non-entrepreneurs incorporate the estimated retirement cost.

For example, if you want to live a new life after leaving your business or leaving a job, you are creating the hardships that must be paid for with the resources left of the Life Balance Sheet. Desires to buy vacation home, start another business or fulfill charitable donations also represent debt.

Think of a Balance Sheet with the Listed Properties on the left and the Credit on the right. Included assets include housing, retirement plans, and family business. Included, this is worth $ 2,000,000. To this we will add $ 800,000, the amount of money that the owner is expected to earn as money in the business. This increases the value of the Global Economy to $ 2,800,000 /

Under Debt we compile a list of three well-known factors including mortgage, college fees and retirement savings. The total is $ 1,800,000. This leaves $ 1,000,000 as Discretioinary Wealth; money that a person can spend as they please, but this will help the net to become more valuable, retirement, even their heritage.

Using the Life Balance Sheet helps owners, professionals and others put value (value) on their assets (earnings) as well as their debts (retirement etc.). This information should enable owners to re-evaluate all that is real and real – including the value of their business – to ensure that they are on track to achieve their long-term goals.

[1] Wilcox, Jarrod, Jeffrey E. Horvitz and Dan di Bartolomeo, 2006. Investment Management for Taxpayers, Charlottsville, VA: Research Foundation of CFA Institute.