Take a Walk Through the Balance Sheet -
Know More About Your Company Or a Prospective One  

Take a walk down your balance sheet.  It can be an interesting trip.  You might learn a lot along the way!

Overview

1. Introduction
2. Snapshot Over Time
3. Signal of Quality
4. Shows what management expects
5. Barometer Of Integrity

Practical Situations

1. Early Stage Companies
2. Raising Capital
3. Turnaround Situations
4. Acquisition

Case Histories

1. Toys
2. Pharmaceuticals
3. Consumer Goods
4. Health Care
5. Cleaning Supplies

Cash

1. Barometer of Health
2. Cash Balance- What’s In It
3. Cash Sweeps
4. Cash Flow Statement
5. Cash Flow Forecast
6. Daily Cash Rollforward
7. Daily Cash Float
8. Bank Reconciliations- What’s Unusual
9. Cash Transfers
10. Cash Comfort- Coverage- Payroll & Other

Accounts Receivable

1. Customers Speak- With Their Checkbook
2. AR Metrics- DSO & Other Traditional
3. AR Soft Spots- Timing of Collections At Each Stage
4. AR Aging- What’s Hanging Out There
5. AR Aging- Look For the Diagnol
6. AR Rollforward
7. AR Reconciliation
8. Internal vs External
9. General Ledger Entries- Adjustments
10. Bad Debt Reserve
11. Allowances & Other Reserves
12. What’s Missing

Other Receivables

1. Advances- Sign Of a Squeeze?
2. Unusual Transactions?

Inventory

1. Sign of the Future
2. Inventory Aging
3. Inventory Metrics
4. Unusual Valuation Accounts
5. Inventory Absorption
6. Inventory Reconciliation
7. Obsolescence Reserve
8. Other Reserves
9. Inventory Ledger
10. Check It Out

Prepaid Expenses

1. Room For Game Playing?
2. Subsidiary Ledger
3. Prepaid Reconciliation
4. Amortization Timing
5. Future Value?

Fixed Assets

1. Investing In the Future
2. Still Used- For What?
3. Fixed Asset Register
4. Match Vs. Depreciation
5. How Old?

Intangibles

1. How Soft?
2. Still Value?
3. Amortized?

Accounts Payable

1. How Do They Behave?
2. Steady or Floating?
3. AP Aging
4. AP Reconciliation
5. Cash Discounts
6. Loose Ends- Other Troubles
7. AP Metrics
8. AP Cutoff

Accrued Payroll

1. How Are They Paid?
2. How Well Is It Captured?
3. Has Accounting Taken a Vacation?
4. Payroll Taxes

Accrued Expenses

1. What’s Being Accrued?
2. What Else Should Be There?
3. Timing of Payments & Accruals
4. Accrual Reconciliation

Line of Credit

1. Short Term Thermostat
2. What Collateral
3. How Much Cushion
4. Any Squeeze Ahead?

Bank Debt- Short and Long Term

1. How Much Used?
2. What Terms?
3. Bankers or Equity Players?
4. Covenants- Eye On the Ball?
5. Debt Metrics
6. Interest Coverage

Taxes

1. What Makes It Up
2. Anything Missing?

Other Liabilities

1. What Else Is There?
2. How Will They Be Paid?
3. Anything Else Missing?

Stock

1. Preferred or Common
2. What Terms?
3. Equity Metrics
4. Stock Options?

Retained Earnings

1. Red or Black?
2. Other Items

Wrap Up

1. Put It All Together
2. Overall Metrics