Week 10 Reading Reflection

1)   What was the biggest surprise for you in the reading? In other words, what did you read that stood out the most as different from your expectations? 

The biggest surprise for me in the reading is the concept behind the balance sheet; that it should always balance. I had never thought of accounting in this viewpoint before that a business’s assets should always be equal to their liabilities plus stockholders equity. I was expecting to focus on maximizing assets, while limiting liabilities. Through reading this chapter I came to understand the fundamentals of balance accounting and the importance of it.

2)   Identify at least one part of the reading that was confusing to you.

I had a tough time understanding the concept of net present value. The idea that a dollar today is worth more than a dollar in the future was difficult for me to grasp. Though it does make since in hindsight due to the constant rise of inflation, devaluing the currency and also looking at the value of something in terms of the company’s resource allocation base and their needs dictating the need to place a forecasted value on their business decisions.  

3)   If you were able to ask two questions to the author, what would you ask? Why?

First I would ask the author which financial ratios he thinks are the most important to focus on. In the world of business every number counts and the ratios show the underlying health of the business and knowing which ones to focus on would be very helpful.

Second I would ask the author if he prefers the pessimistic or optimistic analysis when using the breakeven point technique. It is very important to try and accurately forecast expected demand to ensure your firm has a strong possibility of being profitable.   

4)   Was there anything you think the author was wrong about? Where do you disagree with what she or he said?

I think that the author was correct on every point he covered.  I feel I have a much better understanding of the financial preparation needed to start my own entrepreneurial journey. Through the concepts covered, I now have the tools and techniques to create a healthy sustainable business.