Eight Fundamentals to Decoding Financial Statements

<p>As Shauna points out, many of us start our business because we’re passionate about what we do and are excited to bring our ideas to market. Unfortunately , finances are often the last thing we want to deal with. Furthermore, when we look to better understand our numbers, financial statements appear to be written in a language foreign to most Founders.</p><p><br></p><p>When we can't make sense of our numbers, it’s hard to trust that we’re making the right decisions for our company, our team, and our bottom line.</p><p>Financial decisions underlie both the success and failure of a business which is why running a business without understanding the story behind your numbers is like driving a car blindfolded - you have no idea where you’re headed.</p><p>It’s time to  demystify the fundamentals of financial statements.</p><p><br></p><p><strong>PART 1 // A SNAPSHOT THAT SPEAKS VOLUMES: THE BALANCE SHEET <br></strong><br></p><p><br>As Shauna explains, the balance sheet figures are what accountants call the “Book Value” of the assets and liabilities.</p><p><strong><br>ASSETS – LIABILITIES = NET WORTH (AKA SHAREHOLDERS’ EQUITY)<br></strong><br></p><p><br>Your business’s value is a financial construct factoring inputs like short and long term assets weighted against short and long term liabilities. </p><p><br>Tune in to Part 1 as Shauna provides examples of each of these inputs to help us better understand the current value of our business. You’ll also gain important insight into how to process the numbers so we can determine how leveraged and liquid we are. Two important calculations every Founder should come to familiarize themselves with, as they tend to be some of the first numbers lenders look at. </p><p><br></p><p><strong>PART 2 // THE INCOME STATEMENT: WHERE THE BOTTOM LINE IS THE STORY<br></strong><br></p><p><br>Don’t let the title deceive you. While an income statement has a different purpose than that of the Balance Sheet, there is <strong>one link connecting them</strong>—your bottom line—aka, the net