He learns how to interpret the balance sheet, the income statement and the cash flow statement. He finds that each has a story to tell, but each tells it from a different perspective.
He learns how ratios help him to see how his business is performing.
He builds a flexible model of his business and, he can flex his estimates to see which of them affect his business most.
That’s what it’s all about isn’t it? Is the company going to perform well, creating cash and profits?
You will learn how easy accounting is as you progress through the book, it really is as easy as 1=1; and it can be fun too!
‘Understand Accounting’ explains the logic first and you do not meet debits and credits until you reach chapter ten, by which time you will understand the system well.
In chapter ten we go back in time, and eavesdrop on Luca Pacioli, the Father of Accounting, as he explains to his friend Leonardo da Vinci – yes, they really were friends – the logical basis of the double entry system. After reading it you will say to yourself: “What was the need to shroud the system in such mystery?”