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QuickBooks Tips Blog

Reviewing Your Small Business's Balance Sheet

Posted by Joe Mazur on Feb 25, 2013 7:30:00 AM

The Balance Sheet might not get the attention it needs, in fact some small business owners may never even look at it since it doesn't show their 'bottom line.'   When reviewing financials with an owner or manager, the attention seems to float towards Profit and Loss.  Within QuickBooks, a few clicks of the mouse can show profit margins, month to month trends, YTD comparisons, etc.  But utilizing the Balance Sheet can save that same owner or manager some stress down the road.  Do assets outweigh the liabilities?  Are the assets being depreciated properly?  Does the book balance of the loans tie to the actual statement balance?  Depending on the frequency of checking this report, you may be caught off guard by the balances.  Financial Goals vary from owner to owner; maybe it's having the books be investor ready, or possibly seeing how scalable your business could be, or maybe its knowing the amount of cash you would walk away with if you liquidated everything and moved on to the next part of your life.  In order to answer some of these questions, you need to understand the 3 components of the Balance Sheet; Assets, Liabilities, and Equity.

Assets

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Topics: Financial Forecasting, Bookkeeping Tips, Business Financial Troubles