Chapter 4

Proving Worth Using the Balance Sheet

In This Chapter

arrow Introducing what’s what on the balance sheet

arrow Taking a closer look at assets, liabilities, and owners’ equity

arrow Understanding how you can use the balance sheet

The balance sheet is a record of how the value of a company is allocated so that managers, investors, and others can evaluate how effectively the assets are being managed. Throughout this chapter, I explain what each piece of the balance sheet means and touch briefly on how the balance sheet is used.

Introducing the Balance Sheet

The balance sheet is a financial report that’s useful to anyone who has even the slightest interest in a business, including management, investors, lenders, business students, union representatives, and all other stakeholders. In short, the balance sheet includes important stuff, so pay attention to this chapter!

The Securities and Exchange Commission requires that all corporations maintain a balance sheet and highly recommends that any business keep one. After all, its main purpose is to illustrate the exact value of a company in the very moment that the data are collected. Unlike other financial reports, the balance sheet doesn’t compile ...

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