Question

From the perspective of management, explain the importance of the balance sheet (think in terms of accounts that have a direct impact of operations

Answer 1

Answer)

Balance sheet can be termed as snap shot of a organisation at a particular point of time. It shows what a organisation owns and how it got financed and also what are to be paid in short term and what in long term etc.

By comparing the balance sheet of current period with previous period helps the management what are the unutilised resources like cash, machinery etc which may be used to improve business and similarly assets like inventory increase more rapidly than sales then management must think of ways either increase sales or reduce inventory costs etc