Anyone can impress with complexity and fanciness, but explaining a critical element in simple terms can be difficult.
Because companies exist for the benefit of their owners, readers of company financial statements often think about the information presented only from the point of view of those owners.
For example, a reader possessing an owner's point of view would see equity as valuable when reviewing the company's balance sheet. But, for the company itself, equity is not valuable, only assets are valuable.
This small, simple distinction holds tremendous power when communicating the meaning behind the numbers, but is often ignored - or unseen - by accounting educators.
An experienced senior lawyer who attended one or our recent workshops said to me, “Point of view, hmmmm, that’s a big take-away for me.”
Best regards, Peter