Understanding Your Own Balance Sheet
Every MSME by regulation or otherwise has to prepare their balance sheets.
How many of MSME understand their balance sheet
A balance sheet as per incomplete is prepared by Aug/Sep which is 5 months late from actual closing on 31st March.
Never the less, it is better to understand their balance sheet. It gives a lot of corrective information which can if implemented in right earnest, will extend the life of MSME by few years.
There is risk model which can predict bank reply possibilities.
I know many entrepreneurs who are in business for 30 years and have heard this first time.
When you go to the bank for enhancement bank looks into top line, bottom line, current ratio and DSCR mainly but this arrives in balance sheet became of operational efficiency. They do not advice entrepreneur for corrective action.
When you go to your Auditor, for income tax. They look into Topline, bottom line, gross profit and net profit and they do not advice.
So try yourself to understand your balance sheet yourself.