Why Your Balance Sheet Matters More Than You Think
There’s a quiet blind spot in many small and medium-sized Kenyan businesses: one that doesn’t show up in daily sales, busy tills, or even a healthy profit figure. It sits in a document most owners rarely look at: the balance sheet.
Most business owners focus on the Profit and Loss (P&L) statement: revenue in, expenses out, profit at the bottom. That is important, yes, but the P&L only tells you what happened over a period of time. It does not tell you what your business is worth right now, how much you owe, or whether you can survive a bad month.
That is exactly what a balance sheet does. Think of it as a photograph of your business taken on a specific date: it shows everything your business owns, everything it owes, and what is left over for you as the owner. Interpret it correctly, and in combination with the 2 other core financial statements, it becomes one of the most powerful decision-making tools you have.
In this guide, we will walk through the balance sheet in plain English with no accounting jargon or complicated formulas. You’ll get a clear, practical explanation of what it all means and how to use your balance sheet to run a smarter, more financially resilient business.
What Is a Balance Sheet?
A balance sheet is a financial statement that shows the financial position of your business at a specific point in time — for example, ‘as at 31 March 2025’. It answers three questions:
- What does the business own? (Assets)
- What does it owe? (Liabilities)
- What is left for the owner? (Equity)
Think of it like your personal net worth. If you own a house worth Ksh 8M, a car worth Ksh 1.5M, and savings of Ksh 300,000; but you still owe Ksh 4M on a SACCO loan and Ksh 500,000 on a car loan, then your real net worth is Ksh 5.3M(What you own minuswhat you owe). Your business balance sheet works the same way.
The Balance Sheet Formula
| The Core Equation:Assets = Liabilities + Equity |
Let us translate that:
- Assets = everything the business owns (cash, stock, equipment, property)
- Liabilities = everything it owes (loans, supplier credit, tax obligations)
- Equity = what belongs to you, the owner. Basically, what would remain if you settled all debts today
The reason it is called a balance sheet is simple: both sides must always equal each other. Assets on one side; liabilities and equity on the other. They always balance. If they do not, something has been recorded incorrectly.
Breaking Down the Balance Sheet
1. Assets: Everything Your Business Owns
Assets are divided into two categories based on how quickly they can be converted into cash.
Current Assets (things you can turn into cash within 12 months):
- Cash in hand and in the bank (including M-Pesa business accounts)
- Stock or inventory: goods you are holding to sell
- Debtors (also called trade receivables): customers who have bought on credit and owe you money
- Short-term investments or prepayments
| Example:A wholesale electronics distributor in Downtown Nairobi holds Ksh 2M worth of stock – that is a current asset. But if those TVs and phones are sitting in the warehouse for four months without moving, that ‘asset’ is really cash that is locked up and unavailable to pay salaries or restock fast-moving items. |
Non-Current Assets (long-term assets that stay in the business for several years):
- Vehicles: delivery vans, company cars
- Machinery and equipment: salon chairs, industrial printers, POS systems
- Property: land or buildings the business owns
- Furniture, computers, and other office equipment
Non-current assets lose value over time through a process called depreciation. Your accountant will record the present value (purchase price less amount depreciated over the ownership period) of the asset on the balance sheet.
| Example:A tea company in Kericho purchases a delivery van for Ksh 2M. The van is expected to serve the company for 5 years. The depreciation amount of the vehicle is Ksh 400,000 per year (Ksh 2M ÷ 5 years).After 2 years, the value of the vehicle recorded in the balance sheet is Ksh 1.2M (purchase price less depreciation amount over 2 years) to reflect wear and reduced market value. |
2. Liabilities: Everything Your Business Owes
Liabilities are future cash outflows i.e., money that will eventually leave your business to settle obligations. Like assets, they are split into two types.
Current Liabilities (due within 12 months):
- Supplier credit (also called trade payables): money owed to your suppliers
- Short-term bank loans or mobile loan facilities: overdraft facility, M-Shwari, Fuliza, etc.
- Taxes payable to Kenya Revenue Authority: VAT, PAYE, income tax, etc.
- Unearned revenue: advance payments from customers for goods or services not yet delivered
| Pro Tip:Unpaid tax obligations are liabilities. They do not disappear by being ignored. They accrue penalties and interest, and they should appear on your balance sheet whether you want to acknowledge them or not. Ensure that you review your tax position regularly. |
Non-Current Liabilities (due in more than 12 months):
- Long-term bank loans: from KCB, Equity Bank, Co-op Bank, or Stanbic
- Asset financing: hire purchase agreements for vehicles or equipment
- Director loans with extended repayment terms
3. Equity: What’s Actually Yours
Equity is the owner’s stake in the business. It is what would remain if you sold everything the business owns and used the proceeds to clear every debt. Equity is made up of:
- Owner’s Capital: the money you originally invested to start the business
- Retained Earnings: profits that have been kept in the business over time rather than paid out
- Less: Drawings and/or Dividends: money you have taken out of the business for personal use
| 💡 Key Insight:Growing equity over time is a sign of a healthy, value-building business. If your equity is shrinking year after year, even if your revenue is strong, your business is losing real value. That is a red flag worth investigating. |
Example: Zawadi Hardware & General Supplies, Thika
Let us put this into practice. Below is a simplified balance sheet for a fictional but realistic Kenyan hardware business.
Zawadi Hardware & General Supplies – Balance Sheet as at 31 March 2025
| Item | Ksh | Notes |
| ASSETS | ||
| CURRENT ASSETS | ||
| Cash & Bank (including M-Pesa) | 200,000 | Low figure. Potential risk signal |
| Stock / Inventory | 3,000,000 | Main asset – moves slowly |
| Accounts Receivable (Customers who owe us) | 1,200,000 | High. collection needed |
| Total Current Assets | 4,400,000 | |
| NON-CURRENT ASSETS | ||
| Delivery Van (net of depreciation) | 800,000 | Fixed asset |
| TOTAL ASSETS | 5,200,000 | |
| LIABILITIES | ||
| CURRENT LIABILITIES | ||
| Supplier Credit (Trade Payables) | 2,500,000 | Due within 30–60 days |
| Short-term Bank Loan | 500,000 | Due within 12 months |
| VAT & PAYE Payable to KRA | 180,000 | Tax obligations |
| Total Current Liabilities | 3,180,000 | |
| NON-CURRENT LIABILITIES | ||
| Long-term Bank Loan | 500,000 | 3-year term |
| TOTAL LIABILITIES | 3,680,000 | |
| OWNER’S EQUITY | ||
| Owner’s Capital | 800,000 | Initial investment |
| Retained Earnings | 720,000 | Profits kept in business |
| TOTAL EQUITY | 1,520,000 | |
| TOTAL LIABILITIES + EQUITY | 5,200,000 | = Total Assets |
At first glance, Zawadi looks like a well-capitalised business: Ksh 5.2M in total assets. But a closer read tells a more nuanced story:
- Only Ksh 200,000 of those assets is actual cash. That is less than 4% of total assets.
- Ksh 3M is tied up in stock – goods that need to sell before they become cash.
- Ksh 1.2M is in debtors – customers who owe money but have not yet paid.
- Total liabilities of Ksh 3.68M are significant – particularly the Ksh 2.5M owed to suppliers.
- Equity of Ksh 1.52M means the owner’s real stake is relatively thin compared to what the business owes.
| The Takeaway:Zawadi is not in crisis, but it is operating with very little financial cushion. If a major supplier demands early payment or an unexpected financial emergency occurs, the business could face a cash flow crisis despite technically being ‘asset-rich’. This is the kind of insight that the balance sheet reveals. Zawadi’s management should prioritize shortening its cash conversion cycle (the time taken to convert inventory to cash). They can make several initiatives such as limiting the credit days given to customers, actively pursuing amounts owed, and running marketing promotions to move their inventory faster. |
How to Actually Read a Balance Sheet
Like with the P&L, reading a balance sheet provides better context regarding the company’s when the current period is contrasted to a previous period (month, quarter, or year). That’s why many balance sheets usually show the current period and the period being compared to.
Step 1: Start With Your Cash Position
Look at the cash line first. How much actual cash is available today? Does it match your day-to-day experience? Zawadi’s balance sheet shows Ksh 200,000 in the bank which may make them feel squeezed as they have to pay salaries and create a cash reserve buffer for unforeseen expenses. Most of their cash is held up in high stock levels and slow-paying customers.
Step 2: Look at What Customers Owe You
Scroll down to debtors (receivables). A high and growing debtors figure means your cash is sitting in other people’s pockets. This is particularly common in Kenya when dealing with government agencies, parastatals, or large corporates that take 60–90 days (sometimes longer) to pay invoices.
| Example:A Nairobi-based construction contractor has Ksh 10M outstanding in unpaid invoices from a government project. On paper, they look wealthy. But they have not been able to meet their monthly payroll or pay for materials for the next phase. |
Step 3: Check Inventory Levels
Excess stock is one of the most common cash flow killers for Kenyan retailers and distributors. Too much stock means capital is locked in goods that have not yet generated any income. Too little stock means missed sales and disappointed customers. Your balance sheet helps you see whether your inventory levels are proportionate to your sales volumes.
Step 4: Understand Your Debt Load
Look at total liabilities: both current and non-current. What loans exist? Do you owe suppliers any money? When are the payments due? Can your income realistically service those payments? A business carrying Ksh 4M in loans on Ksh 1M in equity is in a very different risk position than one with Ksh 1M in loans on Ksh 3M in equity.
Step 5: Calculate Your Real Net Worth
Finally, check the equity figure. Is it growing year over year? Compare this year’s balance sheet to last year’s. If your equity has grown from Ksh 800,000 to Ksh 1.52M, that is a business accumulating genuine value. If it has shrunk, you need to understand why, even if your P&L shows a profit.
Key Balance Sheet Ratios You Should Pay Attention To
You do not need an accounting degree to use these. Three simple calculations can tell you a lot about your business health.
1. Current Ratio
Current ratio is a function of your current assets divided by your current liabilities. It answer a simple question: can your business comfortably survive the next 3 to 6 months?
| Formula:Current Ratio = Current Assets ÷ Current Liabilities |
This tells you whether you have enough short-term assets to cover your short-term obligations. Here’s a simple guide on how to interpret your current ratio:
- Above 2.0: Comfortable cushion
- 1.0 to 2.0: Manageable, but monitor closely
- Below 1.0: Warning sign. Immediate attention is required
2. Debt-to-Equity Ratio
Debt-to-Equity ratio shows how much of your business is funded by debt versus your own money.
| Formula:Debt-to-Equity = Total Liabilities ÷ Owner’s Equity |
A high ratio (above 2.0) means lenders and creditors own more of your business than you do; which is risky, particularly when interest rates rise or business slows down.
A lot of Kenyan banks use this figure when assessing loan applications.
3. Working Capital
Working capital is the cash or near-cash available to run the business day to day.
| Formula:Working Capital = Current Assets − Current Liabilities |
A positive figure means you have room to operate.
A negative figure means your short-term debts exceed your short-term resources; a situation that can quickly spiral into a cash crisis.
Here is how those three ratios look for Zawadi Hardware:
| Ratio | Formula | Zawadi Result | What It Means |
| Current Ratio | 4,400,000 ÷ 3,180,000 | 1.38 ✓ | Can cover short-term bills, but the current situation is very tight |
| Debt-to-Equity | 3,680,000 ÷ 1,520,000 | 2.42 ⚠️ | Business is heavily debt-funded |
| Working Capital | 4,400,000 − 3,180,000 | Ksh 1,220,000 ✓ | Breathing room for daily operations |
| Quick Read:Zawadi can technically cover its short-term obligations (current ratio above 1.0). However, the debt-to-equity ratio of 2.42 is high meaning the business is significantly funded by debt. If a lender or investor reviewed this, they would want to see a plan to reduce their debts and/or payables before extending new credit. |
How to Use Your Balance Sheet for Better Business Decisions
1. Deciding Whether You Can Afford to Expand
Thinking about opening a second branch, taking on a new product line, or hiring extra staff?
Before you commit, check your balance sheet:
- Do you have enough working capital to absorb the additional costs while waiting for the new revenue to kick in?
- Is your current debt load already at the limit of what the business can service?
Expansion financed by weak equity and more debt is a recipe for stress.
2. Managing Cash Flow Problems Before They Happen
The balance sheet is an early warning system. Certain patterns are signals of trouble ahead:
- Rising debtors: customers are taking longer to pay; your cash is drying up
- Growing inventory: goods are not moving; capital is getting trapped in stock
- Increasing short-term liabilities: you are funding operations with short-term debt, which is expensive and fragile
Spotting these trends on consecutive balance sheets allows you to act before the crisis hits.
3. Negotiating Better Terms With Suppliers and Banks
A clean, up-to-date balance sheet is a negotiating asset. When you walk into a lender or your main supplier with a well-prepared balance sheet that shows healthy equity, manageable debt, and strong assets, you are in a far stronger position to negotiate favourable loan terms, extended credit limits, or better payment terms.
| Practical Tip:Banks do not just lend based on revenue – they lend based on balance sheet strength. Before your next loan application or supplier credit review, make sure your balance sheet is accurate, current, and tells the strongest honest version of your financial story. |
4. Bringing in Investors or a Business Partner
Any serious investor or partner will want to see your balance sheet before committing a shilling. They want to know your equity position, your debt load, and whether your assets are real and properly valued. An accurate, professionally prepared balance sheet builds credibility and trust. A messy or inconsistent one raises red flags.
5. Avoiding the ‘Profitable but Broke’ Trap
A P&L showing a Ksh 500,000 profit does not mean you have Ksh 500,000 in the bank. Profit and cash are not the same thing. Profit is an accounting figure – it includes revenue you have invoiced but not yet collected, and it excludes loan repayments that reduce cash but not profit. The balance sheet combined with a cash flow statement gives you the complete picture.
Additional Balance Sheet Terms
Zawadi Hardware’s balance sheet is rather oversimplified. While this example serves the purpose of understanding how a balance sheet works, business models and practices vary widely across sectors so you may encounter additional entries or terminology that were not captured in Zawadi’s balance sheet.
Here are some additional entries and accounting jargon that are commonplace in SME balance sheets:
| Term / entry | Section | Meaning | Example |
|---|---|---|---|
| Goodwill | Asset | The extra value a business has beyond its physical assets: its brand reputation, loyal customers, or market position. Typically appears when a business has been purchased for more than the value of its tangible assets. | A Nairobi pharmacy acquired for Ksh 5M when its physical stock and equipment are only worth Ksh 3M. The Ksh 2M difference is recorded as goodwill. |
| Intangible assets | Asset | Things of value the business owns that you cannot physically touch: trademarks, patents, software licences, franchise rights, or intellectual property. | A tech startup in Westlands has developed a proprietary billing software. The development cost is recorded as an intangible asset on the balance sheet. |
| Prepaid expenses | Asset | Money paid in advance for a service not yet received. It is an asset because the business is owed something – a future benefit it has already paid for. | A printing business in Industrial Area pays its annual insurance premium of Ksh 120,000 upfront in January. At the end of March, Ksh 90,000 is still a prepaid (unexpired) asset. |
| Capital work in progress (CWIP) | Asset | The cost of assets that are under construction and not yet ready for use. They cannot be depreciated until they are brought into service. | A manufacturer in Industrial Area is building a warehouse extension. The construction costs incurred so far (Ksh 2.5M) are recorded as CWIP until the building is complete. |
| Leasehold improvements | Asset | Money spent improving a rented property e.g., partitioning, tiling, signage installation. You do not own the building, but you own the improvements you made to it. | A salon in Westlands fits out a rented space at a cost of Ksh 150,000. That investment is capitalised as a leasehold improvement and depreciated over the lease period. |
| Biological assets | Asset | Living plants or animals held for commercial purposes. Common in farming and agribusiness. Valued at fair value under International Financial Reporting Standards (IFRS). | A dairy cooperative in Nakuru holds 200 Friesian cows. These are biological assets recorded at fair market value, not at cost. |
| Deferred tax asset | Asset | A tax benefit the business expects to receive in a future period; often arising from temporary timing differences between accounting profit and taxable profit. | A company makes a loss this year of Ksh 500,000. Under Kenyan tax law, this can be offset against future profits. The anticipated future tax saving is a deferred tax asset. |
| Cash equivalents | Asset | Short-term, highly liquid instruments that can be converted to cash almost immediately with minimal risk of value change. Distinct from cash itself. | Treasury bills (T-bills) purchased through the CBK with a maturity of 90 days – common for Kenyan companies managing excess liquidity. |
| Notes receivable | Asset | Formal written promises (promissory notes) from customers or debtors to pay a specific amount at a future date, often with interest. | A Mombasa-based building materials supplier formalises a Ksh 800,000 overdue debt from a construction firm into a promissory note due in 6 months. |
| Accrued liabilities / accrued expenses | Liability | Expenses that have been incurred but not yet paid or invoiced. The cost is real and belongs in the current period, even though no cash has left yet. | A Nairobi law firm’s staff work through March but are not paid until the 5th of April. The March salaries (Ksh 300,000) are an accrued liability on the 31 March balance sheet. |
| Deferred revenue (unearned income) | Liability | Cash received from customers before the goods or services have been delivered. It is a liability because the business still owes the customer something. | A Nairobi events company receives a Ksh 500,000 deposit for a conference to be held in June. In March, that deposit is a liability since the service has not been delivered yet. |
| Provisions | Liability | Amounts set aside for likely future costs whose exact size or timing is uncertain. Common examples include warranty claims, legal disputes, or staff leave pay. | A Nairobi electronics retailer sets aside Ksh 150,000 as a warranty provision for products sold. The exact claims are unknown but are statistically predictable. |
| Contingent liabilities | Liability | Potential future obligations that depend on the outcome of an uncertain event – typically disclosed in the notes rather than on the face of the balance sheet. | A Nairobi business facing a labour dispute of Ksh 2M that is still before the Employment and Labour Relations Court. Disclosed in notes if the outcome is uncertain. |
| Directors’ loan accounts | Liability | Money owed by the business to its directors or shareholders; often used when an owner has advanced personal funds to the business. | A founder injected Ksh 1.2M from personal savings to cover a cash shortfall. Until formally converted to equity, this is recorded as a directors’ loan, a liability of the business. |
| Dividend payable | Liability | Dividends that have been declared (approved) by the shareholders but not yet paid out to them. | A Kenyan manufacturing firm’s AGM approves a Ksh 2M dividend distribution in March. Until the cheques are issued in April, the Ksh 2M is a current liability. |
| Bank overdraft | Liability | When a current account goes below zero, the bank has effectively extended short-term credit. Classified as a current liability. | A Nairobi distributor’s bank account runs to a Ksh −80,000 balance near month-end due to a timing mismatch. |
| Share capital / paid-up capital | Equity | The total value of shares issued to shareholders in a limited company, at the par (face) value. Distinct from the price the shares were actually sold for. | A Kenyan private limited company issues 10,000 ordinary shares at Ksh 100 par value each = Ksh 1,000,000 in share capital on the balance sheet. |
| Share premium | Equity | When shares are issued at a price above their par (face) value, the excess goes into the share premium account. | The same company issues shares to a new investor at Ksh 250 each against a par value of Ksh 100. The Ksh 150 difference per share = share premium. |
| Revaluation reserve | Equity | When a non-current asset (typically property) is revalued upward, the increase in value is recorded here, not in profit and loss. | A Kiambu-based agro-processor gets its warehouse revalued from Ksh 5M (historical cost) to Ksh 8M (current market value). The Ksh 3M uplift is a revaluation reserve. |
| Non-controlling interest (NCI) | Equity | In a group balance sheet, the portion of a subsidiary’s equity not owned by the parent company. | A Kenyan logistics company opens a branch in Tanzania. The Kenyan company owns 51% of the Ugandan branch, with the other remainder owned by a Tanzanian partner who runs the operation locally. The 49% portion outside their control is the non-controlling interest. |
| Accumulated losses | Equity | The opposite of retained earnings: when a business has made cumulative losses that exceed its profits, equity is eroded. Sometimes called a deficit. | A Nairobi restaurant that has been loss-making for 3 years shows accumulated losses of Ksh 800,000 in its equity section. The business’s net worth has shrunk accordingly. |
| Notes to the financial statements | Notes | Supplementary information attached to the balance sheet and other financial statements. They explain the numbers, accounting policies, and any items that need further context. | The notes might explain how stock was valued (FIFO vs weighted average), or disclose a pending KRA tax assessment not yet resolved. |
| Related party transactions | Notes | Transactions between the business and its owners, directors, or entities they control; required to be disclosed to ensure transparency. | A director who owns a property rented by the company at Ksh 120,000/month. This must be disclosed as a related party transaction in the notes. |
| Post-balance sheet events | Notes | Significant events that occur after the balance sheet date but before the accounts are signed off. Disclosed so readers get the full picture. | A Kenyan business whose main customer is declared insolvent in April (after the 31 March year-end) must disclose this in the notes as it affects the debtors figure. |
| Going concern | General | An assumption that the business will continue to operate for the foreseeable future. If this assumption is in doubt, the accounts must say so – and asset values may need to be written down. | A hospitality business still recovering from pandemic losses may have a going concern note flagged by its auditor if it cannot demonstrate it can continue trading. |
| Net book value (NBV) or Carrying Amount | General | The current value of an asset on the balance sheet: original cost minus accumulated depreciation. Not necessarily the market value. | A Ksh 1.5M vehicle depreciated by Ksh 600,000 has a net book value of Ksh 900,000. The actual resale price might be higher or lower. |
| Liquidity | General | How quickly an asset can be converted to cash without significant loss of value. Cash is fully liquid; property is illiquid. | A business holding Ksh 3M in unsold land and Ksh 50,000 cash has high assets but very low liquidity; it cannot pay salaries with a plot of land. |
| Solvency | General | Whether a business can meet all its long-term financial obligations. A business can be liquid (has cash today) but insolvent (owes more than it owns overall). | A business with Ksh 2M in assets and Ksh 4M in total liabilities is technically insolvent even if it is generating monthly revenue. |
| Impairment | General | When an asset’s market value drops below its carrying amount on the balance sheet, the difference must be written off as an impairment loss. | A Nairobi retailer holds outdated smartphones purchased for Ksh 1M. Current market value is Ksh 600,000. The Ksh 400,000 gap is an impairment that must be expensed. |
Common Balance Sheet Mistakes Kenyan SMEs Make
Understanding the balance sheet also means understanding where things typically go wrong.
Not Recording Stock Accurately
If you do not carry out regular stock-takes, your inventory figure on the balance sheet is a guess. Overstated stock inflates your assets and makes the business look healthier than it is. Understated stock does the opposite. Both lead to poor decisions.
Ignoring Tax Liabilities Until KRA Comes Knocking
Unpaid PAYE, VAT, and income tax are real liabilities. They should appear on your balance sheet every period. Many SME owners only confront these obligations at year-end, by which point penalties and interest have compounded significantly. Track them monthly.
Treating the Balance Sheet as a Once-a-Year Document
Your accountant may prepare a formal balance sheet annually, but you should be reviewing it at least quarterly. Fast-moving businesses like retail shops, restaurants, and distributors should review it monthly. Financial decisions are made year-round, not just in December.
Overinvesting in Fixed Assets
A common pattern: a business buys a new vehicle or installs expensive equipment, which looks great on the asset side but has drained cash and increased loan obligations. The balance sheet reveals this imbalance immediately, showing high non-current assets alongside low cash and high liabilities.
Tools and Support for Kenyan SMEs
You do not have to do all of this manually or alone.
Accounting Software
- QuickBooks: widely used by Kenyan SMEs; generates balance sheets automatically
- Xero: excellent for growing businesses and those with multiple users
- Zoho Books: affordable, with strong local VAT and KRA compliance features
- Wave Accounting: free, cloud-based, suitable for early-stage businesses
Most of these tools will generate a balance sheet at the click of a button, as long as your transactions have been entered accurately.
Working With a Professional Accountant
Accounting software generates the numbers, but a qualified accountant helps you interpret them and act on what they reveal. Look for a CPA(K) registered with the Institute of Certified Public Accountants of Kenya (ICPAK). Firms like Alphacap that specialise in SME advisory can help you not just prepare your balance sheet, but use it as a genuine business planning tool.
Compliance With Kenya Revenue Authority
A current, accurate balance sheet is required for filing annual income tax returns with KRA via the iTax portal. It also forms part of your audited financial statements if your business is required to submit them. Keeping it updated throughout the year, rather than scrambling at year-end, saves time, reduces errors, and minimises the risk of penalties.
Conclusion: Turn Your Balance Sheet Into a Decision Tool
Your balance sheet is not a document for your accountant’s drawer. It is a live, actionable map of your business’s financial health, and once you know how to read it, it changes the way you make decisions.
Let us recap what you have learned:
- The balance sheet shows what your business owns (assets), what it owes (liabilities), and what belongs to you (equity)
- Assets = Liabilities + Equity. Always, without exception
- Current assets and current liabilities reveal your short-term financial position
- Three key ratios – Current Ratio, Debt-to-Equity, and Working Capital – give you quick health checks
- Reading your balance sheet regularly helps you spot problems early, make smarter expansion decisions, and negotiate better with banks and suppliers
Start today: ask your accountant or bookkeeper for your most recent balance sheet. Sit down with it using the five-step framework in this guide. Check the ratios. Ask the questions. You may be surprised (and well-armed) by what you find.
Need Help Interpreting Your Financials?
Alphacap provides accounting, tax advisory, and financial management support specifically for Kenyan SMEs. Whether you need help preparing your balance sheet and other financial statements, understanding what they mean for your business, or using them to plan your next move, our team is ready to help. Contact Alphacap today to learn more.