What is outside capital?
Venture capital, as it were, is capital deficiency of a company. The borrowed capitalof a company consists of its debts and/or liabilities. These items are on the credit (right side) of the balance sheet. So this means that the company owes money to third parties for example; goods received, services or loans.
What is included in outside capital?
The concept of loan capital still distinguishes between two groups, long-term loan capital (VVL) and short-term loan capital (VVK). Items that fall under long-term debt are debts that have a maturity of more than one year. All other debts that extend for less than one year are labeled as short-term debt. In principle, all these payment obligations must be paid within one year.
The company’s equity is also placed on the balance sheet with its foreign assets. Equity is prepared by doing the assets minus all the debts of a company. Equity indicates the balance of assets and liabilities. Total foreign equity thus consists of equity (E.V.) and VVL + VVK.
Ratios
You can use the items on the credit side of the balance sheet to calculate various ratios. These ratios can reflect, for example, whether a company is well liquid and solvent. For example, profitability of total assets (RTV), profitability of foreign equity (RVV) and that of equity (REV) can be calculated using different formulas. Using the results, standard measures can be used to assess how financially sound a company is.
