Looking at financials differently

Description

Abstract: A lender conducting due diligence who only reviews past financial statements is not seeing the full road ahead — and that road might be littered with hazards. This article explains that an inquiry should start with a risk assessment involving the industry, economic conditions, sources of collateral and business operations. It then involves using certain key metrics to evaluate the financial statements. A sidebar notes that a profitability analysis should extend beyond the top and bottom of the income statement to certain individual line items.