Question

what could a company do to improve its balance sheet? Provide an example

Answer 1

A Balance sheet is the picture of financial health of a company, which is helpful for investors, creditors etc.

A company can improve its financial statement or balance sheet by the following ways:-

• By Reducing liabilities- A company can improve its financial statement by Reducing it's liabilities, paying off its debts and increase assets and equity of the company.
• Pay close attention to inventory control- By checking Inventory control, company may reduce its risk of inventory obsolete, damage which improves the Balance sheet.
• Keep checking manufacturing costs - A company can improve its balance sheet by keep checking manufacturing costs as by checking manufacturing costs it will be clearly seen whether the manufacturing costs is not more than cost of the product etc which will improve the performance of the company and its Balance sheet.
• Carefully identification of underperforming assets-  By carefully identification of underperforming assets, company can improve assets performance and improve its balance sheet also.

​​​​Example- If a company is having more liabilities to pay so, by paying off, a company can improve its balance sheet and by checking the manufacturing costs and underperforming assets company can improve its assets performance and also it's balance sheet.