Understanding Balance Sheet/P&L

An introduction to the prime financial statements for credit control staff and non-specialists. No previous knowledge or experience required.

Introduction and Objectives

• Candidates to give their current level of financial experience and knowledge - if any.


• Objectives of the day explored and explained

Part One - The Balance Sheet

• What is a Balance Sheet - destroying the myths


• How and why does it balance?


• Introduction to the concept of Assets and Liabilities

Understanding Assets

• Current - Fixed - Intangible - Others

Understanding Liabilities

• Current Liabilities


• Shareholders funds


• Loans


• Taxation and other liabilities

Exercise 1 - constructing a Balance Sheet for YOUR fictional business.

Video - The Balance Sheet Barrier

Part Two - The Profit and Loss Statement

• What does the statement tell us? What is its purpose?


• Gross profit (or margin


• Operating profit and exceptional items


• Profit before tax (PBT) and


• Earnings before interest and tax (EBIT)

Exercise 2 - constructing a Profit and Loss Statement again for your business

Video - About Working Capital

Exercise 3 - To analyse briefly our fictional business (The balance sheet gives up its fundamental secrets!)

At the end of this workshop it is expected that attendees should be able to understand and carry out the following key basic activities.

Candidates should be able to read and assess a balance sheet and P & L statement to recognise a company's true net worth and financial strength.

Candidates should be able to understand and assess the effects of trading activity and business decision making on a typical balance sheet.

Candidates should be able to measure and understand gearing and financial leverage of a typical business.

Candidates should be capable of understanding all the key financial words and phrases (technical jargon) and able to comprehend their basic meaning and use in simple analysis of a balance sheet and P & L