Financial health · NetSuite TD3016323

Balance Sheet Trend Analysis

Liquidity, working capital, asset and liability movement, and red flags across three balance sheet dates twelve months apart.

Prepared 2026-09-23 · Consolidated, subsidiaries 1-3, elimination excluded · Source: NetSuite general ledger via SuiteQL · Prompt: Balance Sheet Trend Analyzer, NetSuite AI Prompt Library v1 · Standard Review depth

Executive Summary

Over twelve months to August 2026 the balance sheet grew 83%, from $3,743,013 to $6,863,556 of assets, while trailing revenue grew 27%. The difference is working capital. Receivables rose 119% and inventory 140%, and the operating cycle stretched accordingly: days sales outstanding went from 37 to 63, days inventory outstanding from 53 to 105, and the business held payables longer, 43 to 69 days, to help pay for it. Cash still grew, from $1,906,516 to $2,647,367, partly because $560,000 of capital was injected during the year.

Liquidity is not the concern. The current ratio is 4.21 and leverage is low at 0.31 debt to equity. The concern is that the capital tied up in receivables and inventory has roughly doubled while sales grew by a quarter, and that the receivables and payables control accounts carry balances well above the open invoices and bills behind them. The first is an operating problem. The second is a books problem, and it should be settled before the first is acted on.

Balance Sheet Trend

Comparing: balances at the end of Aug 2025, Feb 2026, and Aug 2026, built from cumulative posted activity, consolidated across the three operating subsidiaries with the elimination entity excluded. Assets equal liabilities plus equity at each date to the dollar.

Working capital lines at Aug 2025 (gray) and Aug 2026 (blue).

Liquidity and Working Capital

Calculated using: DSO = trade receivables / trailing twelve-month revenue x 365; DIO = inventory / trailing twelve-month cost of goods x 365; DPO = accounts payable / trailing twelve-month cost of goods x 365. All three are balance-sheet measures against ledger flows, so the receivables figure includes the unreconciled control balance discussed below. On open invoices alone, receivables would be $927,459 and DSO about 28 days, still above terms but a different order of problem.

The cash conversion cycle went from 47 days to 99 days. Every one of its three components moved the wrong way for cash: customers paying slower, stock sitting longer, and suppliers being paid later to compensate.

Asset and Liability Analysis

Materiality is set at 10% of total assets or a 20% change for detailed analysis. Four lines qualify: receivables, inventory, payables, and cash. Fixed assets appeared for the first time in 2026, $12,008 net, which is immaterial and noted only because a business of this size with no fixed assets before this year is itself unusual.

Inventory. $872,179 to $2,095,776. Cost of goods over the same window grew 21%, so stock is turning about half as fast as a year ago. If the increase is deliberate, to support the furniture volume the product analysis shows, it should show up in sales over the next two quarters. If it doesn't, it is the largest single claim on cash in the business.

Receivables. $964,318 to $2,108,405. The ledger balance is $1,180,945 higher than the open invoices, and the open invoices themselves include $472,126 more than 90 days past due. The receivables analysis run alongside this report attributes the past-due balance to a small number of customers who have never paid.

Payables. $710,051 to $1,383,823, of which only $180,934 is open vendor bills. The rest is journal-posted, the same pattern as receivables.

Equity. Retained earnings and current-year income grew $1,715,816, and capital stock grew $560,000. The business is profitable on the ledger and was also funded by its owners during the year.

Red Flags

Priority Actions

Flags 1 through 3 are material balance changes without a documented explanation and require human review under the prompt's controls, as does any liquidity or financing recommendation. No debt restructuring or capital raise is recommended; liquidity is adequate.

Appendix: Data Lineage

Adaptations from the prompt's templates: balances are cumulative sums of transactionaccountingline.amount to each period end, rather than the per-period sums the template produces, because a balance sheet is a stock not a flow; retained earnings for the current year are derived from cumulative income and expense postings, since NetSuite closes them only at year end; the AR aging template uses DATEDIFF, which SuiteQL doesn't support, replaced with TRUNC(SYSDATE) - TRUNC(duedate); transaction.subsidiary is not exposed, so the elimination subsidiary is excluded through the line.

SELECT a.id, a.acctnumber, a.fullname, a.accttype,
       SUM(CASE WHEN ap.enddate <= DATE '2025-08-31' THEN tal.amount ELSE 0 END) AS bal_p1,
       SUM(CASE WHEN ap.enddate <= DATE '2026-02-28' THEN tal.amount ELSE 0 END) AS bal_p2,
       SUM(CASE WHEN ap.enddate <= DATE '2026-08-31' THEN tal.amount ELSE 0 END) AS bal_p3
FROM transactionaccountingline tal JOIN transaction t ON t.id = tal.transaction
JOIN transactionline tl ON tl.transaction = tal.transaction AND tl.id = tal.transactionline
JOIN account a ON a.id = tal.account JOIN accountingperiod ap ON ap.id = t.postingperiod
WHERE tal.posting = 'T' AND tl.subsidiary <> 4 AND ap.enddate <= DATE '2026-08-31'
GROUP BY a.id, a.acctnumber, a.fullname, a.accttype

SELECT id, entity, duedate, foreignamountunpaid, TRUNC(SYSDATE) - TRUNC(duedate) FROM transaction
WHERE type = 'CustInvc' AND posting = 'T' AND foreignamountunpaid > 0
-- and the same for type = 'VendBill'

-- DL-003: SUM(-tal.amount) by a.accttype for each of three twelve-month posting windows

Appendix: Assumptions and Verification

Confidence: 95% in the balances as posted and the liquidity ratios; 70% in the efficiency ratios, because the control-account discrepancy inflates receivables and payables; the working-capital conclusion holds on either basis.