What drives value, drives credit
Abstract: Balance sheets give financial statement readers insight into a company’s financial position — its assets and liabilities — at a given point in time. But it’s dangerous to equate the book value of equity on the balance sheet with the equity’s fair market value. For many reasons, these values can be significantly different. This article explains why a balance sheet can present an incomplete picture of financial position, and why it’s important to track future earnings and evaluate local comparables.