Financial Statements of Financial Services Firms
Why should banks and firms offering financial services be discussed separately from other service firms that we saw in the previous chapter? For all firms that we have studied so far, money is a means to procure assets—both fixed assets and current assets—that the firms deploy for their operations. Money is used to procure raw materials that are converted into goods that are further sold to customers to earn revenues and profits. What if money itself becomes the raw material? Well, that’s what business models of banks are made of. Nonbank financial service firms share similarities with nonfinancial firms offering services such as IT services in that inventory is insignificant as the service ...
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