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Episode 112


Topic: Everything You Always Wanted to Know about Balance Sheets

Guests: Dan Gordon, PCO Bookkeepers & M&A Specialists, and Donnie Shelton, Triangle Home Services

In this episode we discuss:

  • What is a balance sheet and why is it important in the pest management industry?

  • How a balance sheet is "what you have" vs. a P&L that shows "what you made"

  • How banks, vendors, investors and others use the balance sheet

  • How you can use the balance sheet in your business

  • How Donnie uses the balance sheet

  • What makes up a balance sheet and the accounting formula that represents it (assets = liabilities + equity)

  • Why it's important to have a banker who understands the pest control industry

  • The problem with loans to shareholders as "other assets"

  • How "intangibles" (trademarks, customer lists you purchased) play a role

  • The current ratio (current assets / current liabilities), a liquidity ratio that measures a company's ability to pay short-term obligations

  • How the equity number on your balance sheet is different from net worth

  • Why Dan says debt to assets ratio is more useful than debt to equity for pest control

Resources mentioned:

Notable: "If I'm sitting on cash I'm tempted to pay stuff off. Fight that urge. Don't get rid of your cash. Every time I've done it, I've kicked myself." —Donnie Shelton

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