Negative Numbers on the Balance Sheet

Sometimes the little things can make a big difference in financial analysis. For example, when analyzing a balance sheet, knowing how to interpret a negative number can tell you if:

• Its a normal condition, nothing to worry about
• There's a bookkeeping problem that needs attention
• The company is in financial distress.

The ability to quickly scan a balance sheet and know whether its accurate can save you a lot of time. If you're a business owner and are presented a balance sheet at months end with obvious errors, send it right back to the bookkeeper for rework. Don't waste time starting your financial analysis.

This skill can also save you embarrassment. You never want to send to your banker or prospective investor a financial statement that has a glaring problem you're not aware of. It undermines your credibility in the eyes of outside parties.

In this video, the author, an experienced small business CFO and financial expert, introduces you to how to interpret the negative numbers on a balance sheet when theyre normal, and when they spell trouble.

This video is part of our Balance Sheet 101 series. Its intended for bookkeepers and business owners who want a basic introduction to this important financial statement so they can better manage the company they work for or own. It assumes little or no knowledge about financial statements.

The author uses QuickBooks 2009 Accountants Edition and Microsoft Excel 2009.

----------------------------------------------------
Copyright 2009 David Stern CFO. All rights reserved.

Category:

Education

Tags:

• QuickBooks
• Excel
• Accounting
• bookkeeping
• Small Business
• finance
• balance
• sheet

[MsWise88]

Really good. Thank you very much. I didn't know what a negative number was until I listened to it and it has helped me with Excel.

kind regards

Anna