Standard Chartered Bank

Women in Business
Resource Centre

Modules

• Reviewing financial statements
• Analysing income statements
• Analysing balance sheets
• Controlling cash flow
• Approaching growth strategically
• Becoming more customer-focused
• Strategies for penetrating new markets
• Leveraging technology
• Leading others
• Influencing and negotiating
• Self awareness and personal impact
• Marketing to women and targeting
  female customers

Analysing Balance Sheets

From a financial perspective, the world revolves around the balance sheet and the cash flow forecast. When we forecast our business growth, we must address the issues of what additional assets we will need, and how we plan to pay for those assets. This is where banks come in. Banks finance assets. If we know what our asset growth will be, we can estimate what our financial needs will be. If we can estimate our financial needs, we can involve the bank and finance those needs appropriately.

 

Balance Sheet Ratios

Three common ratios taken from the balance sheet alone are the working capital ratio, the quick ratio and the debt to equity ratio. Here is how we can calculate these ratios for Sample Company:

The Working Capital Ratio measures the ability of a company to repay debt due in the next year. For every dollar in current liabilities, there are this number of dollars in current assets.

The Quick Ratio measures the ability of a business to repay debt due in the next year with cash, liquid investments, and accounts receivable. Inventory is subtracted because it may sell for less than paid for if sold as inventory or in distress.

The Debt to Equity Ratio compares the investment by the owners to the amount borrowed by banks and suppliers.

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