The Story of the Balance Sheet

As a Non-Finance manager there are 3 main things you can look for when looking at a Balance sheet;

The problem is most don’t know where to look and what is what or even what the purpose of a Balance sheet is.

Not being Accounting literate can be daunting and overwhelming.

Let’s take a few steps back:

a Balance sheet is 1 of the 3 financial reports that tells us the story of the financial performance of a business
The Balance sheet in summary tells us the strength of a business
The Balance sheet shows us at a given point in time the amount of assets the business owns, how much liabilities it owes & how much share the owners have left in the business as equity
The Balance sheet tells us how the business funded it operations i.e. how much assets it acquired, how much it borrowed from lenders and how much was invested by the owners
The Balance sheet tells us which of its Assets and Liabilities are current and non-current. Current being short term meaning it will be realised or settled in the next 12 months
The opening and closing cash balance of the Balance sheet forms as major inputs into the Cash flow statement – this means they are connected as the ones impacts the other

Sounds simple right?

Well, that is how we explain concepts and principles in our 1 day Accounting Made Easy virtual training program using color and visuals.

Join us and let’s empower you to concurring your fear of the numbers and helping you read and interpret financial information.