How to Achieve a Well-Balanced Operation

The numbers on the statement do not depict a well-balanced operation due to the poor mix of liabilities and equity. The total liabilities of the Spouse House Company amount to $211,000 (Shoffner et al., 2011). Given this figure and that of the total assets, the amount of equity financing can be computed by subtracting the liabilities figure from the total assets’ amount. In this sense, the total amount of equity is $69,500. The amount of liabilities of the Spouse House Company is around three times its amount of equity. For this reason, there lacks of a well-balanced operation. From the assessment of the balance sheet, it is evident there are some areas that are better than others. For instance, the part of the current asset is better than other parts of the balance sheet. The firm's total current assets amounting to $222,000 is higher than its amount of fixed assets. This scenario indicates that Spouse House Company is highly liquid, meaning that it can settle its debt obligations quickly and easily (Shoffner et al., 2011). However, the entity’s liabilities portion is not so favorable. The liabilities exceed the firm's equity by more than three times, indicating that Spouse House Company is highly-leveraged. 

Conclusions 

Overall, there is a high financial risk to Spouse House Company's shareholders and lenders. The high level of debt increases the probability of the entity collapsing, and this scenario does not bode well for both parties. Moreover, the low level of equity means that there is a high risk pertaining to the shareholders' return on equity since, in the event of collapse, the debt holders will be paid first. In this regard, there is a low chance the shareholders will be repaid their investments. 

Reference 

Shoffner, H. G., Shelly, S., & Cooke, R. A. (2011).  The McGraw-Hill 36-hour course: Finance for non-financial managers 3/E. McGraw Hill Professional.