Can the Balance Sheet Reveal Financial Position?

Abstract The article explores the concepts of financial position held by various groups interested in a business and attempts to determine whether or not the balance sheet as presently constituted can serve these different groups. Creditors in general view the information given in the balance sheet concerning assets, liabilities, and equity from a different point of view than that of management or owners. Therefore, a balance sheet of value to creditors must incorporate information that will allow them to judge a debtor's financial position and that will thereby, meet the creditors' concept of financial position. Within the owners' group, as within tile creditors' group, there are several concepts of financial position to be developed the relationship of the owner to the enterprise has an important bearing upon the owners' interpretation of financial data. Because of the large number of management groups, each with special interests, no uniform concept of financial position can be developed, nor can these groups be classified for this purpose under one or two simple headings. Each group will necessarily have its own concept of financial management.