The analysts evaluate the financial position of the firm by considering the size of assists and the balancing of the counterpart. The liquidity of the firm is provided through the metrics and then compared with the balance sheet figures, for instance, the working capital and the current ratio [3]. The financial structures and the capital of the firm are based on the balance sheet ratio for the liabilities, level of leverages, and capitalization of the firm [4]. The income statement and the balance sheet are based on the simple arithmetic equations such as income statement equation, balance sheet equation, accounting equation and the equation of credit and debits. The basic equations are provided below

Income statement equation of Accounting Misconception

References of Statement of financial position for Dorothy I of Accounting Misconception