Thursday

Reading Your Balance Sheet

Post a Comment April 16, 2009 – 8:46 am | Permalink |  Print This Post |

There are very few experts who know how to read a balance sheet and tell you where you are going wrong with your strategy. I am training myself in this art for last 16 years. I have been into Internal Audits and reading balance sheets all through out.

 I don’t read balance sheets to manage an investment portfolio but to know how a company stands to perform in future and where a little tweaking can help it turnaround and produce breakthrough results for its shareholders.

 It’s a real fun to read a balance sheet if you connect it with the key decisions taken by the management. You can know how management is performing to create wealth for its shareholders.

Interesting aspect about reading a balance sheet and P&L is when you can spot the concern areas quickly that management doesn’t know that it doesn’t know.

Once you know that there is something fishy, its time to find answers and reasons. Informed enquiries with management along with knowledge of business and processes, helps you to get to the skin of the issues.

 Second task is about communicating what you have read to the management and inspire them to do something about it. That ’something’ which you suggest will bring forth new possibilities and higher value addition for the management.

My intense knowledge in Management Audits along with my ability to read financials helps me coach the management for creating higher value.

You talk about better corporate governance, controls, planning, resource utilization, revenue generation, revenue leakage, cost reduction, where you will look first? All involves a closer look into financials. Different people look at financials in a different way.

Auditors look at a balance sheet in a different way. When you do due diligence for M&A, you read balance sheet in a different way. When you read balance sheet from point of view of wealth generation, it’s a different ball game. It’s strategic and it’s innovative.

SMEs can add great value if they get their balance sheet read by an expert. It’s important they understand the game of wealth generation. The expert spends few hours with you, visit your facilities, factories, offices and of course your balance sheet and P&L and come out with value adding recommendations that can produce breakthrough results involving turnaround of your business, increased cash generation, increased revenue, reduced cost, reduced losses and introduction to new possibilities of growing.

 Reading balance sheet in this economic recession is very important. Read yourself or ask for some help.

If business consultant tells you what you already know then kick him out and invite the one who tells you something that you don’t already know.

To know more on reading balance sheets please mail me at narayan.mantri@proteusadvisors.com

To read my blogs, log on to www.proteusadvisors.com/case_studies.htm

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