Your financial statements may not make the bestseller list, but they do tell an intriguing story—at least to a banker. Unfortunately, the tale they tell may be misleading. Since finance is no place for fiction, you need to make sure your statements tell the truth, the whole truth, and nothing but the truth.
To do that, the first thing you need to know is that lenders read an abridged version of your balance sheet and income statement. Their credit department crunches your numbers to generate key ratios that make it easy to quickly assess your financial health. The more you understand about the ratios they care about and how they're derived, the better you'll be at making the story they tell a good one.
Subject(s): Small Business, Accounting
Source(s): American Express OPEN blog
Author(s): Kate Lister
Posted: 2010-12-18
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