A balance sheet helps you:
- Quickly get a handle on the financial strength and capabilities of your business
- Identify and analyze trends, particularly in the area of receivables and payables. For example, if your receivables cycle is lengthening, maybe you can collect your receivables more aggressively
- Determine if your business is in a position to expand
- Determine if your business can easily handle the normal financial ebbs and flows of revenues and expenses
- Determine if you need to take immediate steps to bolster cash reserves
- Determine if your business has been slowing down payables to forestall an inevitable cash shortage