Why balance sheet becomes a key financial statement to understand the business of an organisation? Is understanding balance sheet a pain for people of non finance background?
Rohan Adhalakha (Finance Executive ) (53 Points)
18 March 2010Why balance sheet becomes a key financial statement to understand the business of an organisation? Is understanding balance sheet a pain for people of non finance background?
Jag Bhushan Sharma
(Faculty in a B-School)
(633 Points)
Replied 19 March 2010
Balance Sheet is perhaps the most important document of a business by whichonecan understand the health of a business. This is so because it lists the assets held by a business on one side and on the other side are listed sources of those assets (own capital or outside liabilities). It is very much simple to understand even for a non finance background person. All big businessmen who talk and deal with big figures are not finance people. Some ratios can be calculated to understand the short-term and long-term solvency of the business. Inter-firm and intra firm camparisons can also be made.
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