How Can an Entrepreneur Use a Balance Sheet?
Balance sheets are used by entrepreneurs to determine whether or not the business is in a strong position to grow and/or evolve financially. For instance, the balance sheet should easily show whether or not an entrepreneur can afford to take risks financially because they’ve padded themselves adequately for the normal ups and downs of running a business, or if measures to safeguard the financial security of the business would be more prudent. Balance sheets also show trends in payables and receivables, and what, in turn, should be focused upon. A business with a long payment cycle may look at its balance statement and see how things could be tweaked, or it may notice that the payables have slowed down in frequency in order to deal with a potential cash shortage.
