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How to read a balance sheet

In this tutorial we introduce the Balance Sheet using our case study company, London Coffee Company. We discuss how balance sheets are organised and identify its major groups, namely assets, liabilities and equity.

Reading solvency ratios tells us whether a company's cash flow is sufficient to keep it running in the short term. We look at how to analyse a company's solvency using the balance sheet. 

Activity ratios measure the efficiency with which a business uses its assets to generate cash and sales. We calculate ratios for London Coffee Company directly from the balance sheet.

We bring all our balance sheet skills together with a practical example. We analyse Starbucks Balance Sheet to draw conclusions about the company's assets, liabilities and equity.
 

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