So you hit $100K in monthly revenue.
Or maybe it's $500K.
Hell, maybe you're crushing it at $5M.
The number isn't important - here's what is: what's that revenue actually worth if you're sitting on unpaid inventory bills, maxed-out credit cards, and barely enough cash for next week's ad spend?
Welcome to the world of balance sheets - where revenue numbers come to face reality.
In this guide, we'll look at VF Corporation's balance sheet - the company behind Supreme, Vans, North Face, and Timberland.
Why them?
Because they're dealing with the same challenges you are, just with more zeros.
They're managing inventory, juggling supplier payments, and trying to keep enough cash on hand - sound familiar?
We'll break down their numbers into bite-sized pieces, showing you exactly what to look for in your own balance sheet.
No fancy MBA required.
Just practical insights that could save your business when things get tough.
Think of this as your financial survival guide. Ready to see what your numbers are really telling you?
What is a Balance Sheet?
A balance sheet is your company's financial selfie at a specific moment in time.
While your P&L (profit and loss statement) tells you that you made $1M in December, your balance sheet shows whether you had enough cash on December 31st to keep the business running.
The Three-Part Story
Every balance sheet tells a story in three parts:
- Assets (what you own)
- Liabilities (what you owe)
- Equity (what's actually yours)
Here's where it gets interesting: Assets = Liabilities + Equity. Always.
If these don't balance, something's wrong with your numbers.
Current vs. Non-Current: Why It Matters
Assets and liabilities are split into current and non-current.
Think of "current" as "next 12 months."
Current assets will turn into cash, and current liabilities will need cash within a year.
Everything else? That's non-current.
Breaking Down Your eCommerce Assets: What You Actually Own
Let's dive into these sections using VF Corporation's real numbers.
Why?
Because whether you're moving $10K or $10M in inventory, the principles stay the same - and their struggles might just help you avoid some expensive mistakes.
1. Cash - why it’s especially important for eCommerce businesses
This is obviously important because cash is what keeps a business alive.
Generally speaking, the bigger the balance, the better.
If it's very high, you may want to look for opportunities to pay off debt or invest more in growth.
If it's very low, you may need to look for opportunities to reduce cash expenditures or ways to increase cash via debt or investment.
The cash balance alone doesn't give you the whole picture, though, so you need to understand how that balance changes over time and why.
That information is captured somewhat in the profit and loss statement and the cash flow statement.
For most e-commerce brands, this number is extremely crucial because they don't often have access to many different sources of cash.
Most banks don't feel that comfortable lending to e-commerce businesses, and investment cash isn't as easy to come by as it used to be.
So, you generally want to try to maintain a healthy cash balance and reserve at least a few months' worth of expenses and also enough for any major outflow of cash to buy more inventory.
Here we can see that VF Corporation used to have about $1.3 billion in cash.
As time went on, their cash balance has decreased, but they do still have pretty healthy reserves.
2. Accounts receivable
This is the cash that you're expecting to collect from customers for goods that you've already shipped.
Most e-commerce businesses won't have to worry about receivables because they're selling on Shopify, so they just collect their cash right away.
However, as a brand expands and they start selling to wholesale customers, this will become a relevant issue.
Usually, the biggest concern when looking at a receivable balance is how likely it is to be collected.
It's not uncommon for a brand to hold a receivable on their balance sheet for a customer that's probably never going to pay them.
While it may look like you have $30,000 of value available, if no one's going to pay you, that receivable is worthless.
Usually, to validate this, you'll look at the accounts receivable aging schedule.
That'll give you a list of all the invoices, how much they're worth, and how long they've been outstanding.
The longer an invoice has been outstanding, generally the less likely it's going to be collected unless there's a valid reason.
The accounts receivable balance for VF is pretty high, with over a billion dollars in expected receivables.
However, in 2024 they had about $10 billion in sales, so roughly 10% of that being a receivable is not unreasonable.
Then again, VF sells a lot of their products to other retailers; the wholesale is a very significant portion of their business.
So when looking at an e-commerce brand, your receivables should be compared to the wholesale revenue, not your total revenue.
3. Inventory
Now, for a public company like VF Corporation, the inventory balance is probably a little less at risk, but for e-commerce brands that are a little less sophisticated with their accounting, there are a few things to be concerned about.
It's not uncommon for an e-commerce brand's inventory number that I see to have errors in it, and it's usually due to one of three things.
- There's an inaccuracy with respect to the quantity.
A lot of brands don't really have robust ways of tracking how much inventory they have because they just rely on the 3PL.
So sometimes there can be mismatches there, especially if they do their own warehousing and don't have a very sophisticated system. - There can be inaccuracies with respect to the inventory costing.
It's not always easy to accurately determine your cost per unit, so there can be mistakes here.
For example, it's common for a brand to record their inventory at the cost that they pay the manufacturer, without including things like shipping and customs and duties.
- Obsolescence.
Inventory can either expire or just get old, such that you can't sell it for more than what it cost you.
When that happens, you have to write the inventory down to the amount that you can actually recover from it.
In the case of VF Corporation, their inventory has had quite a bit of volatility, going from 1.4 billion to 2.3 to 1.8.
A good way to determine if that balance is too high is by comparing it to the rate that you sell inventory at, but we'll get to that ratio later.
4. Other current assets
Next up, they've got other current assets, which can include a bunch of more minor things, a common one being examples like prepaids.
Prepaids are where you pay upfront for something, but you only actually receive the service or whatever it is as time goes on.
Two very common examples are if you pay for insurance, you might pay an annual due, and that covers you for the next 12 months, or a legal retainer.
Sometimes you pay a bulk amount upfront, and they will deduct from that over time as they actually do work for you.
5. Non current assets
The most common category is going to be your property, plant, and equipment.
This is sort of a catchall for any large asset that you're going to use for many years.
That can range from a computer to a vehicle to a piece of equipment to an entire building.
For most e-commerce brands, this amount should be quite low unless you have your own warehouse or do your own manufacturing.
Mostly, you'll just find some computers and maybe a vehicle. VF Corporation has a decent amount, going from about a billion dollars to 800,000.
Now, VF Corporation does have some stores of their own, but a lot of their products are sold via third parties like Foot Locker and Dick's Sporting Goods.
So the amount of fixed assets that they have will be higher than most e-commerce brands, but then again lower than a brand that is mostly brick and mortar, say for example, a Forever 21.
Generally speaking, a lower number here is good because it means that a lot of the company's value isn't tied up in assets that are difficult to liquidate.
It's hard to sell a machine or a building in a pinch.
VF Corporation also has some other categories like intangible assets and goodwill.
These categories can be a little bit more complex and aren't often relevant for most e-commerce brands, but they can arise from things like patents or trademarks or acquiring a brand for a lot of money.
For example, if VF Corporation paid a lot of money to acquire Supreme, then some of that value might be captured in the goodwill.
For most e-commerce brands, those are the main assets you'll be concerned about.
Liabilities: What Your eCommerce Business Owes
Next up, you've got your liabilities.
These basically represent obligations that will require an outflow of cash in the future to settle them.
1. Short-term borrowings
VF has some short-term borrowings like commercial paper.
For most e-commerce brands, that'll often be a line of credit.
2. Long-term debt
They also have the current portion of long-term debt.
What that represents is that if you have a large loan, it's the amount that's going to be due in the next 12 months.
3. Accounts payable
Next up, you've got your accounts payable, a big chunk of which is going to be the bills from your manufacturers.
VF's balance has gone up over time from about 500k to 800k.
Now, on the one hand, you don't want this balance to be too high because it means that you owe a lot of money.
On the other hand, it can also mean that you're very good at extending terms with your creditors.
For example, if you have a manufacturer that expects you to pay them every 30 days, then you're going to have a certain balance, but if you can convince that manufacturer to give you 180 days to pay, then your payable balance will be a lot higher, even though you're doing the same amount of purchasing.
So here, similar to the receivables, looking at an accounts payable aging can give you a good sense of whether or not that's very current or long-term payables.
Either way, though, if your payable balance is low, it can give you solace that the cash that you have isn't going to need to go to pay a manufacturer very soon.
4. Accrued liabilities
The simplest way to think about this is payables for which you haven't received a bill yet.
That means that some of the entries in this account are going to be estimates because you don't know the final amount yet.
The major risk with this account is that it's incomplete.
It's very easy for items to be missing from this account because there's no paper trail for it.
For example, if a lawyer sends me a bill, there might be a very standard process where I take that bill, enter it into the system, and that appears in my accounts payable balance.
However, if I get my lawyer to do some work for me and he tells me it'll probably cost about 50k, and he completes the work, but then for whatever reason he doesn't send me the bill for 6 months, I should have recorded that accrual for 50k, but oftentimes, because there's no paper trail, people forget about it.
5. Credit card payable
One major category of liabilities that's very common for most e-commerce brands, but that doesn't appear on this balance sheet over here, is that of credit card payables.
VF is a massive company, so they probably don't use their credit cards as heavily as most e-commerce brands do, which is why it doesn't have its own line.
But for most e-commerce brands, a good 90% of their expenses that aren't inventory will be on their credit card, and so that's also a good balance to keep an eye on, similar to accounts payable, because it gives you an indication of how much cash is going to have to go out, usually in the next 30 days, to settle those balances.
6. Deferred revenue
Another category that's not that common for all e-commerce brands, but oftentimes comes up for those that are subscription brands, is deferred revenue.
This basically represents amounts where you've collected the cash but haven't yet sent the goods.
Most commonly, you'll see that in instances where a brand sells a six-month subscription upfront.
Another example is if you do a pre-sale for a product launch. All the cash that you collect isn't revenue until you actually ship the goods.
7. Gift card liabilities
One other category that's quite common for e-commerce brands is your gift card liabilities.
This basically represents the total amount of value that you are obliged to provide in the future should the customers who have purchased gift cards go and redeem them.
But these last two accounts are usually not that significant, so we'll leave it at that.
8. Non-current liabilities
In the non-current liabilities, your most common section is going to be your long-term debt.
The major concerns around debt are going to be your total balance, the interest rate, and the repayment schedule, but you should also consider any potential debt covenants.
These are rules that a lender may put on you to reduce their risk.
That could be something like maintaining a minimum amount of current assets relative to current liabilities.
It's important to be aware of these because the covenants can sometimes restrict the types of activities that a business can conduct.
Furthermore, if the covenants are violated, there can be some significant repercussions to the brand.
VF's debt load is quite hefty, ranging between 4.6 billion and 5.7 billion.
That can be a reasonable amount if they were engaging in some pretty significant growth activities, but we'll get to how to analyze that a little later.
Equity
After we've counted what you own and subtracted what you owe, we're left with equity - the true value of your business.
Think of it as your "net worth."
This can sometimes underrepresent the value of a company, though, because oftentimes certain assets are not recorded at their true value.
For example, because of the accounting rules, inventory is recorded at its cost, not at the value it can be sold for.
Also, if a brand does a really good job of scaling and their brand becomes very well-known, the value of that brand name isn't captured on the balance sheet.
Another company might be willing to pay a lot of money to acquire that brand name, but the balance sheet won't show that in its assets.
Nevertheless, the equity does give you a good idea of the company's value.
For simplicity, there's usually two main sections to the equity:
- money that investors have put into the company, and
- profit that the company has accumulated over time
For e-commerce brands, equity often looks lower than your business's true value.
Why? Your inventory is recorded at cost, not selling price.
Plus, your brand value - possibly your most valuable asset - isn't on the books.
For now, we'll leave it at that and move over to the fun part.
How to analyze an eCommerce Balance Sheet
How frequently should you be analyzing the balance sheet for your ecommerce business?
For items like cash, accounts receivable, accounts payable, and inventory, you should be looking at those daily or weekly.
Those are the most important accounts, and they change quite frequently, so it's good to have a good pulse on them.
For the rest of your balance sheet, though, a lot of the balances don't change that frequently, so a monthly review should suffice.
Now, there's two main ways to analyze a balance sheet: horizontal analysis and vertical analysis.
Horizontal analysis
Horizontal analysis basically means looking at a particular balance over time to see how it changes.
So, for example, looking at VF Corporation, we can see that their cash over time has gone from 1.3 million in 2022 to 800k the next year and then 600k the next year.
That can show us that there's an unfavorable trend of the cash balance going down over time.
For your own e-commerce brand, this analysis is a little bit more helpful to do on a monthly basis, so basically looking at a balance sheet by month to see the trends in a little bit more detail.
Vertical analysis
Vertical analysis is when you look at a specific balance sheet period and then compare different line items.
These ratios can give you a really good insight into the company's health.
1. Current ratio
One of the most common ratios to keep an eye on is your current ratio.
You calculate this by looking at your current assets over your current liabilities.
This gives you an idea of whether your most liquid assets are enough to cover the liabilities that are coming up in the next 12 months.
A ratio below one can be risky because it means that the assets that you have might not be enough to cover the next 12 months' worth of current liabilities.
In the case of VF Corporation, their current ratio went from a 1.38 to 1.45 to 1.22.
This isn't necessarily unhealthy, but it does mean that things have gone a little bit tighter in recent years.
A ratio closer to one isn't necessarily bad, but it does just mean that things might be a little bit more risky.
2. Net working capital ratio
Next, you've got your net working capital ratio.
Your working capital is basically your current assets minus your current liabilities.
What this number does is tell you if all of your liabilities are covered, how much free cash do you have available to play with?
And generally, the more working capital you have, the better it is because you have more flexibility to make certain maneuvers.
The net working capital ratio compares your sales to this number.
Basically, it's an indication of how effectively you're using your working capital to generate sales.
Like, let's say, for example, I had $100,000 of working capital, but I was only able to generate $10,000 in sales.
That probably means that I'm not using that value particularly effectively.
On the other hand, if I have $10,000 of working capital but generate $100,000 in sales, that means I'm being pretty efficient. It's an indication that I don't need a lot of money to generate a lot of revenue.
In the case of VF Corporation, they do seem to be doing relatively well here.
While their sales have gone down from 11.8 million to 10.4 million, their working capital has also gone down from 1.3 million to about 800,000.
As a result, their net working capital ratio has gone from 9.3 to 13.6.
What that tells you is that while their working capital decreased by 40%, their sales only decreased by about 12%, which is a good sign, meaning that the decrease in working capital isn't hurting their sales too much.
3. Inventory turnover
The next ratio that's very important for an e-commerce brand is inventory turnover.
You calculate this by taking your cost of goods sold and then the average inventory balance between the current period and the previous period.
What this tells you is how many times you can sell through your inventory balance within a given period of time.
For example, if I had $100,000 of cost of goods sold and I'm carrying a $10,000 inventory balance, that means I'm able to sell through my inventory 10 times.
You usually don't want to be sitting on a large inventory balance, so generally speaking, the higher this ratio is, the better, as long as it doesn't mean you're going out of stock.
For VF Corporation, their inventory turnover went from 2.97 to 2.47.
The total number isn't that bad, as it means they're holding about 4.5 months' worth of inventory, but the fact that the ratio went down isn't great because the amount of inventory they sold went down while the amount of inventory they're holding went up.
So it can be an indication that they're having difficulty selling their inventory, as well as the fact that there might be some inventory in there that's kind of old.
4. Debt-to-equity ratio
The last ratio we'll look at is your debt-to-equity ratio.
You calculate this by dividing your total debt over your total equity.
Generally, you want this ratio to be as low as possible.
That means that the company is being funded more by its own value rather than by debt.
While there's nothing wrong with funding a company via debt, if that number gets too high, it can be a lot more risky.
In the case of VF Corporation, their debt-to-equity ratio has gone from 1.44 to 2.28 to 3.44, indicating a pretty substantial increase over the last couple of years.
The reason for this is that their debt has increased, but their equity has actually gone down.
A big chunk of that decrease in equity is because in 2024, they had about a billion-dollar net loss.
So, the decrease in the company's own value means that they're a lot more reliant on the debt, and like we discussed, that can be a lot more risky for the company's long-term health.
While there is more depth to analyzing a balance sheet, that should give you a pretty solid overview to review it for your e-commerce brand.
The Bottom Line: Your Balance Sheet is Your Business's Safety Net
Your balance sheet isn't just another financial document - it's your early warning system.
While everyone else is chasing revenue numbers, you now know where to look for real trouble (or opportunity).
Remember VF Corporation's story:
- Cash dropped 54% ($1.3B → $600K)
- Inventory turnover slowed (2.97 → 2.47)
- Debt-to-equity tripled (1.44 → 3.44)
What's the takeaway? Review your balance sheet regularly:
- Daily/Weekly: Cash, receivables, payables, inventory
- Monthly: Everything else
Start With Clean Books
Here's the truth: you can't analyze what you can't trust.
Clean, organized accounting data isn't just good practice - it's survival.
Without it, you're flying blind. Every ratio, every trend, every insight we've discussed? They're only as good as your bookkeeping.
Your balance sheet can be your compass through tough times, but only if the numbers are right.
Whether you're doing $10K or $10M in monthly revenue, make sure your foundation is solid.
Want help getting your eCommerce financials in order? Let's talk.
In the meantime, if you want to watch more videos on how to analyze your e-commerce brand's financial health, you can watch this video on five red flags to look out for.
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