FT Guide to Using and Interpreting Company Accounts, 4th Edition

3

The balance sheet and statement of financial position

Introduction

In this chapter I’ll look at the balance sheet in detail, and when you’ve finished reading it you’ll understand:

• The things you’ll find on a balance sheet. I’ll summarise these below and then discuss each one of them in detail later, so that you’ll understand both the balance sheet and the wealth of information found in the notes to the balance sheet.
• How the items on a balance sheet items are valued.
• The different ways that the balance sheet is presented in the accounts.

The balance sheet is probably the only document that everyone regularly prepares, and yet it is the one that managers often find the hardest to understand! You’ve undoubtedly prepared a balance sheet, ...