34+34.	Examine+a+balance+sheet+to+determine+a+business’s+financing+strategy.

Explain how to examine a balance sheet to determine a business’s financing strategy.

I look at the liabilities and owner’s equity part of the balance sheet. This side will indicate bank loans, shareholders investments, retained earnings, and other financing mechanisms. I also look at current liabilities which indicate those things that are coming due in the near term, usually a year or less.

On the asset side I look at the cash position and the accounts receivables. Is the cash position increasing or decreasing and what is happening with accounts receivables? Are there any equipment purchases that will contribute to the revenue stream?