When a client hands you a set of financial statements you have to find something to say pretty quickly. This presentation shows you what to look at in the balance sheet and suggests some questions that you could ask.

1. The first 5 numbers to look
at in a balance sheet
from
businessbankingcoach.com
in association with

2. Here’s the scenario:
the client has just
given you the financial
statements for the
business and you have
to say something
quickly……

3. …..here’s what to look at in the balance sheet
with some questions to ask.

4. Remember the accounting equation....

5. Remember the accounting equation....
....it’s the balance sheet
Assets = Equity plus Liabilities

6. But before you start
looking at the numbers
in detail there’s one
thing you must check
first;

7. Does the total of the assets exceed
the total of the liabilities (debts)?

8. If so, the business
is solvent so you
can carry on.

9. So, these are the first five numbers
to look at in the balance sheet…..

10. Total assets

11. Has the number gone up from the previous
year or gone down?

12. What changed on the other side of the
equation? More or less equity?
More or less liabilities?
Has the number gone up from the previous
year or gone down?

13. What changed on the other side of the
equation? More or less equity?
More or less liabilities?
If non-current assets reduced was it due to
depreciation or were assets disposed of?
Were they productive assets?
Has the number gone up from the previous
year or gone down?

14. Current assets

15. Has the number gone up from the previous
year or gone down?

16. Has the number changed because turnover
changed? If so, in the same proportion?
Has the number gone up from the previous
year or gone down?

17. Has the number changed because turnover
changed? If so, in the same proportion?
Are stock (inventory) and trade debtors
(accounts receivable) equally affected by
the change?
Has the number gone up from the previous
year or gone down?

18. Equity

19. Have profits been retained or have
dividends been paid to shareholders?

20. Has additional equity been invested by the
shareholders? If so, same shareholders as
previously?
Have profits been retained or have
dividends been paid to shareholders?

21. Have profits been retained or have
dividends been paid to shareholders?
Has additional equity been invested by the
shareholders? If so, same shareholders as
previously?
Have any other reserves been created that
weren’t there before?

22. Non-current
liabilities

23. Have non-current liabilities increased or
decreased? Is there a corresponding
change in the non-current assets?

24. Is there new or increased interest-bearing
debt included in non-current liabilities? If
so, what collateral has been given?
Have non-current liabilities increased or
decreased? Is there a corresponding
change in the non-current assets?

25. Current Liabilities

26. Have current liabilities increased or
decreased? Is there a corresponding
change in the current assets?

27. How soon must the current liabilities be
settled?
Have current liabilities increased or
decreased? Is there a corresponding
change in the current assets?

28. How soon must the current liabilities be
settled?
Is there new or increased interest-bearing
debt included in current liabilities? If so,
what collateral has been given?
Have current liabilities increased or
decreased? Is there a corresponding
change in the current assets?

29. We do hope that you enjoyed this presentation.
For more commercial and business banking content,
please visit our website at
www.businessbankingcoach.com
where you can subscribe to our blog, listen to our podcasts
or view and download our other Slideshare presentations.
If you have any questions about this presentation
or any of our other content, please send us an email at
support@businessbankingcoach.com