Balance Sheet – What to look for?

In Short, Balance sheet as name says, is balance of Assets against funds invested via owner/shareholder activity as well as lenders.

Although it sounds like a jargon word, it is not if you break it down.

Usually, Balance sheet is broken into 3 segments:

· Assets – can be further broken down into current and non- current assets

· Liabilities – current and non-current liabilities

· Equities – Also known as capital or funding by owner/shareholders

In sample words, assets are what business has, and liabilities is what business owes difference of both is what belongs to owner/shareholders.

More often, the balance sheet is used to determine the worth of business even though it could be misleading at times, as it mostly shows book value as opposed to market value of the business.

· Tracking the money (where the cash goes!

· Cash burn – how much cash is needed?

· Where will the money come from?

Are some of the few questions a balance sheet can help you answer!!

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