Page 50 - Finance for Non-Financial Managers

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The Balance

Sheet:

Basic Summary of Value

and Ownership

n Chapter 1, we called the balance sheet a freeze frame, a
Iphoto, and a snapshot, to give you an idea of its purpose,
which is to show the financial condition of the business at a sin-
gle point in time. Now let’s get away from the analogies and talk
about what the balance sheet actually is and what it looks like.

Assets and Ownership—They Really Do Balance!
In this chapter we’ll get into the nitty-gritty enough to help you
understand the various line item labels that appear on a balance
sheet, what they represent, and what you can learn from them.
Introducing The Wonder Widget Company
Let’s build our discussion on an example. Throughout this book,
we’ll use an imaginary company, The Wonder Widget Company,
a manufacturer of a wonderful new product for home and gar-
den. Whenever we need an example, we’ll call on our imaginary
company’s financial department to provide it. From time to
time, we’ll give you an actual example from our consulting files,
but we’ll adapt the example for The Wonder Widget Company.

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