CHAPTER 7
What’s Your Company Worth?
The Balance Sheet Holds the Secret
In Chapter 1 we introduced you to the three gauges on your financial dashboard: the Net Income Statement (speedometer), Cash Flow Statement (gas gauge), and Balance Sheet (oil pressure gauge). Now it’s time to learn how the Balance Sheet indicates the overall health of a business.
If you ignore your oil pressure gauge, your engine can seize and your car will grind to a halt. If you ignore your Balance Sheet, so can the business.
If you attempt to continue to run the business without fixing the problems revealed on the Balance Sheet, you will be in pretty deep yoghurt. So it’s a pretty good idea to learn what the Balance Sheet measures; primarily, it measures the relationship ...
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