How to Read and Analyze Your eCommerce Balance Sheet

How to read and analyze your eCommerce balance sheet is super important in understanding the financial health of your business and seeing important glaring issues.
In this video, our Chief Guru, Brittany Brown, takes you through reading an eCommerce balance sheet in QuickBooks Online (our favorite accounting software). She goes from a basic understanding of balance sheets into more in-depth analysis on what you should be looking for, balance sheet ratios, and what it tells you as a eCommerce business owner.
This is our third of 4 videos on understanding eCommerce financial statements:
1. "An Intro to Financial Statements | For eCommerce Businesses": • An Intro to Financial ...
2. "How to Read and Analyze Your eCommerce Income Statement": • How to Read and Analyz...
3. "How to Read and Analyze Your eCommerce Balance Sheet": • How to Read and Analyz...
4. "How to Understand Your eCommerce Cash Flow Statement": • How to Understand Your...
Download our "Five Signs of Bookkeeping Trouble with an Ecommerce Business" - ledgergurus.com/resources/dow...
For help with your eCommerce accounting, you can view our services here: ledgergurus.com/services/
Other related content:
"An Intro to Financial Statements | For eCommerce Businesses" - ledgergurus.com/an-intro-to-f...
"E-commerce Income Statement; Accounts That Need Some Extra Love" - ledgergurus.com/e-commerce-in...
"How to Build a Budget for Your Ecommerce Business" - ledgergurus.com/ecommerce-bud...
"E-commerce Balance Sheet; The Most Important Accounts to Get Right" - ledgergurus.com/e-commerce-ba...
"How to Calculate and Optimize Inventory Turnover" - • Inventory turnover for...
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• How to Read and Analyz...

[@LedgerGurus]

Need more help with your eCommerce bookkeeping and accounting? View our services here: ledgergurus.com/services/

[@DreamFirms]

Thanks for this vid because sometimes reading and analyzing your balance sheet can be overwhelming!

[@jakesilverstein1]

Another excellent video. Brittany is awesome.

[@osamanashwan]

Thank you for this video. As I'm starting my e-commerce business, do I need to sign up for Quickbooks, or is starting small on MS Excel a better idea to save money?

[@LedgerGurus]

QuickBooks Online is a great place to start. If you start in spreadsheets you'll end up having to move all the data over anyway. For that reason, we always suggest starting with QuickBooks Online.

[@nusaibahkofar-naisa9576]

When we consider our inventory asset value should we be looking at our "total inventory at cost value" or our "total inventory at retail/selling price value"? Originally, my balance sheet was showing inventory at its cost value because that reconciled with my bank transactions. However, when I consider the Inventory Turnover Ratio that you discuss in this video, if I'm thinking about the ratio as the "I turned over my inventory X number of times in a given period" then wouldn't it make more sense to use the other metric (inventory at selling price value)?

[@LedgerGurus]

This is a great question. It seems like it would make sense to track an asset at the price you think you could sell it at since that seems like the actual value of the asset. However, for many reasons beyond the scope of this answer, inventory on the Balance Sheet is always valued at its cost.

[@nusaibahkofar-naisa9576]

@@LedgerGurus Okay great. Then, to clarify, the metric we use for calculating our Inventory Turnover Ratio is also "inventory at cost value"?

[@LedgerGurus]

@@nusaibahkofar-naisa9576 yep.

[@nihadmammadov3702]

Hey, I live in Azerbaijan and I have dropship store selling the products from China to USA, whom should I pay taxes? Could I have a call with tax specialist from LedgerGurus to ensure that I am doing everything right? Thank you!

[@LedgerGurus]

Hi Nihad, you can schedule a time with Kexin, one of our sales tax experts, here: calendly.com/ledgergurus-sales-tax/1-hour-sales-tax-consultation?month=2020-12

[@joeanntorricer835]

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