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MBA by Nicholas Bate, Infinite Ideas

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9

Financial feedback

How to read those statements. We can make it soooo easy!!

A critical MBA skill is clearly the ability to attempt to assess the financial health of an organization. There are three major documents to consider:

  • The balance sheet. This is a ‘point in time’ picture of the health of the company concerned.
  • The profit and loss account. This illustrates whether an organization is making money and making profit.
  • The cash-flow statement. This identifies where the cash is, and cash clearly is different to profit.

We’ll expand on each of the above terms fully in a moment, but…

  • Firstly, most MBA students will not get much further than being competent amateurs with accounting – unless, of course, that is their chosen profession. And ...

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