July 2006 Issue

 

The Balance Sheet and Key Liquidity Ratios

Here it is, the 10th of the month, and your bookkeeper trots into your office, financial statement in hand. She has that big grin on her face—not because she knows whether the news she’s delivering is good or bad, but because she got it to you on time. And therein lies a trap. Surely, the timeliness of financial information is important. But a shrewd analysis of that timely information is vital as well. Although your first impulse may be to go straight to the Income Statement to see your bottom line, it’s imperative to examine your Balance Sheet to check your company’s underlying health. Bankers, finance