Chapter 5: Position

In this Chapter:

• The position component of step 3 of the financial value process: identify financial imperatives

• How to read a balance sheet

• Why the proportion or the size of each asset or liability matters so much to the position of an organization

• Important operating and financial ratios that can point you to what your executives will value in improved learning or workplace performance

• Examples of financial value chains connected directly to assets and liabilities.

In this chapter, you ‚ ll continue the connections to financial statements and work on step 3 of the financial value process by examining balance sheets. Balance sheets reflect the distribution of an organization ‚ s assets, liabilities, and owner ‚ s equity. This distribution describes the organization ‚ s financial position. Assets are things that are owned by an organization and that are to be used to generate future income. Liabilities are obligations for which the organization is expected to pay others. After the liabilities are paid, what ‚ s left is known as the owner ‚ s equity.