Importance of having a company culture

Importance of having a company culture

Company culture is the backbone of any successful organization. Every organization, from small businesses to large corporates, has a culture. Company culture includes values and behaviors that adds to the social and psychological environment of a business. A healthy company culture helps in boosting the performance of a business. 

Let’s take a look at 5 reasons why company culture is important:

1. Identity of your company

To begin with, culture contributes to the identity of your company. For instance, if your company prioritizes achieving both organizational goals as well as individual goals, then workers will be more likely to join your company as they see growth both personally and professionally. 

2. Absence of company culture creates chaos

If the company does not have a good work culture, it can be an unhealthy work environment. 

If it does not make the employees happy, then their productivity level will come down. This will directly affect the growth of the individual and hence the growth of the company.

3. Retention of employees

A solid company culture attracts employees who are proficient and, more importantly, retains the existing employees. When people feel like they belong to a culture, they are more likely to make a long-term commitment with the company. This means fewer people to hire and better bonding among your employees.

4. Image of the company

Culture increases your brand image. If you have a high spirited and a cheerful atmosphere, your customers will see you as a gracious brand. Depending on your target customers, that could be a huge advantage for sales and company reputation. 

5. Business growth and longevity 

Good company culture positively impacts business growth and longevity.

Studies show that most of the profitable companies do not primarily focus only on profit making. They give equal importance to the company culture. They believe that a happy employee is a productive employee.

So, when there is a solid company culture, there is retention of employees, business longevity, leading to the growth of the business.

There is no single formula for a “perfect” company culture. It is different for every business. It is important to remember, “company culture is what motivates and retains talented employees”. And this is what will keep the business alive and competitive in the near future.

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Balance Sheet – What is a Balance Sheet and how to maintain it?

What is a Balance Sheet and how to maintain it?

Definition of ‘Balance Sheet’

“A balance sheet is basically a summary of the financial balances of an individual or an organization. It reports a company’s assets, liabilities and shareholders’ equity. “

It is a financial statement that provides an overview of what a company owns and owes, as well as the amount invested by the shareholders. 

Formula used for a balance sheet

Formula used for a balance sheet


How to maintain your balance sheet

1. Use the basic accounting equation to make the balance sheets:

The equation is, Assets = Liabilities + Shareholders’ equity. Assets are the resources owned by the company. Liabilities are the expenses of the company. Shareholders’ equity is the contribution of the shareholders to the company. This information is compulsory to make a balance sheet. 

In a balance sheet, the total sum of assets should be equal to the total sum of liabilities. 

2. Choose a date for the balance sheet:

A balance sheet is made to assess the financial position of a company. Companies usually prepare an official balance sheet every quarter (the last day of March, June, September and December) and at the end of the financial year (December 31 or March 31)

3. Give a heading for the balance sheet:

Use the title balance sheet on the top of a page. Below it, list the name of the company, and the date on which the balance sheet was made. 

4. Prepare the assets section:

A. List all the current assets – Current assets are basically cash and other assets that are expected to be converted to cash easily. 

Include a sub total of the current assets and label it “Total Current Assets”

Please refer to figure 1 to understand the items that come under current assets. 

B. List all the non-current assets – Non-current assets are determined by a company’s value of plant, property and equipment that can be used for more than a year (minus depreciation)

Include a sub total of the non-current assets and label it “Total Non-Current Assets”

Please refer to figure 1 to understand the items that come under non-current assets.

C. List all the intangible assets – Intangible assets are also considered to be non-current assets. They are assets that are not physical in nature and will last for more than 1 year. These include goodwill, patents, copyrights, trademarks and franchises.  

5. Add up all the current and non-current assets and label the total amount as “TOTAL ASSETS”.

6. Prepare a liabilities section:

A. List all the current liabilities- Current liabilities are liabilities that are due to be paid to creditors within one year of the balance sheet date. 

Include a sub total of the current liabilities and label it “Total Current Liabilities”

Please refer to figure 1 to understand the items that come under current liabilities.

B. List all the long-term liabilities- Long term liabilities include any liabilities that will not be settled within one year.

Include a sub total of the long-term liabilities and label it “Long Term Liabilities”

Please refer to figure 1 to understand the items that come under long term liabilities.

7. Add up all the current and long-term liabilities and label the total amount as “TOTAL LIABILITIES”.

8. Calculate Shareholders’ equity:

This includes the capital that is contributed by the shareholders to the company. 

9. Add the “Total Liabilities” and “Total Shareholders’ Equity” figures:

The balance sheet is correct if the “Total Assets” and “Total Liabilities and Total Shareholders’ Equity” are equal. 

If the balance sheet does not tally, then just check if you have missed or repeated any value.

10. If “Total Assets” is greater than “Total Liabilities”, then the company is making a profit. Otherwise, it’s under loss. 

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