Key Management Ratios: The Clearest Guide to the Critical Numbers That Drive Your Business, Fourth Edition

Chapter 2. Financial statements

Introduction • The balance sheet • Balance sheet structure – fixed assets • Balance sheet structure – liabilities • Summary

	Business is really a profession often requiring for its practice quite as much knowledge, and quite as much skill, as law and medicine; and requiring also the possession of money.
	--WALTER BAGEHOT (1826–1877)

Introduction

To have a coherent view of how a business performs, it is necessary, first, to have an understanding of its component parts. This job is not as formidable as it appears at first sight, because:

• much of the subject is already known to managers, who will have come in contact with many aspects of it in their work;

• while there are, in all, hundreds of components, there are a relatively ...