Chapter 11
Figuring Out the Financial Details
IN THIS CHAPTER
Understanding how you calculate profits
Balancing assets against your liabilities
Keeping track of your cash
Looking at your company’s financial ratios
Numbers. Some people love them; others are bored by them; some begin to stammer, shake, and exhibit other physical signs of distress around them. But almost everyone agrees that — love ’em or hate ’em — numbers are the way that you keep track of things. Think baseball, cholesterol, your performance in school, the stock market, and, of course, your very own business venture. Numbers tell you more than simply the score at the end of the game or the final Dow Jones closing, however. When you put them together in the right ways, numbers paint a detailed picture of everything from the career of a ball player to the state of the global economy.
You’re probably familiar with the financial forms that a lender requires when you want to borrow money for a new car, a bigger house, or your dream cabin in the mountains. Those tedious documents include an income statement, as well as ...