The Balance Sheet
By James Kim
The first step towards any kind of analysis is coming up with a means or a concise and effective system to track current and future progress. A financial statement in a form of a balance sheet does just that.
My first exposure to the syntax of the balance sheet is Robert Kiyosaki's book "Rich Dad Poor Dad" As it looks like this.
Income = Cashflow into pocket
Expenses = Cashflow out of pocket
Assets = Probable future benefits
Liabilities = Past obligations
As I write this, I see that there is an interesting way to view it.
The top row can be viewed as cashflow
The bottom row can be viewed as wealth
Also, I see that it can be viewed as a timepiece
Income and Expenses are part of the present
Assets are part of the future
Liabilities are part of the past
In relating this to circuit theory, it might be possible to translate these four corners of the table into some discrete electronic components.
Income = positive cashflow and part of the present. A power supply comes to mind
Expenses = negative cashflow and part of the present. A resistor comes to mind
Assets = Wealth accumulator and part of the future. A capacitor comes to mind (charging)
Liabilities = Wealth decrementor and part of the past. A capacitor comes to mind (dissapating)
All four corners are exposed to environmental effects. In electronics, it could be the atmosphere. In financials, it could be the market.
Electronics devices work better in cold temperatures
Financial circuits work better in highly active markets (hypothesis)ShareThis