5. Financial Statements as a Window into Business Strategy

When looking at financial statements, the challenge for most people is to not fail to see the forest for the trees. Can a corporation’s balance sheet and income statement provide clues not only about its financial performance, but also about its business and financial strategy? Try an exercise to see how far you can get. The income statements and balance sheets in Exhibits 5-1 and 5-2 describe real companies that you’re probably familiar with. For the moment, however, the names are withheld to see how much you can learn about each of them just by looking at the numbers in their financial statements. Suppose as an experienced HR executive, you have been asked to recommend which company’s ...

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