The balance sheet — a critical management tool
Abstract: An income statement is important, but it isn’t the best indicator of a dealership’s financial health. For that knowledge, a balance sheet is necessary. It tells the dealership how well or poorly it’s doing in increasing its equity — and a lot more. This article shows how to use the balance sheet to determine return on equity and calculate debt-service and current ratios. This information can help the dealer determine where its money is going now, while also providing big-picture insights. A sidebar offers a warning about round numbers on the balance sheet — they may signal unsubstantiated estimates, underreported expense or fraud.