Financial statements are the number one tool that we accountants have to communicate with the rest of you. Problem is, most of you don't know a Debit from a Credit and don't know the difference between amortization and depreciation. And most of you don't really care. (But if you do care, I will cover that in a future posting. )
They serve a very useful purpose, these great balanced financial statements. They afford a consistent view of a business year after year. They create a standard language useful in comparing one business to another. They help banks evaluate risk. They help auditors support their opinions. They create measures that give a glimpse into the health of a business. But they do not give a wholistic view of the business. They don't show operational efficiencies. They don't tell you if customers are happy with the solutions they buy. They don't give insights into the environmental impact of the business. Yes the financial measures they provide are important. But it is the non-financial measures that hold the keys to really judging what is happening in a company and which can serve as predictors of future results in the hands of a trained professional.