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Financial Intelligence for Entrepreneurs: What You Really Need to Know About the Numbers by Joe Knight, Karen Berman

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25

The Magic of Managing the Balance Sheet

We’ve mentioned the phrase managing the balance sheet a couple of times in this book. Right now, we want to go into greater detail about how to do it. The reason? Astute management of the balance sheet is like financial magic. It allows you to improve your company’s financial performance even without boosting sales or lowering costs. Better balance sheet management makes a business more efficient at converting inputs to outputs and ultimately to cash. It speeds up the cash conversion cycle, a concept that we’ll take up later in this part. Companies that can generate more cash in less time have greater freedom of action; they aren’t so dependent on outside investors or lenders.

If your company is big ...

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