Nature of the balance sheet The recent annual accounts of a famous European football club reveal that at the end of its financial year the club had total debts of A66 million, of which A45 million were current. Its total assets at that date were A104 million but only A15 million of these were current.

An official of the club is quoted as follows:

We need to set the record straight here. Although it’s true the reported debt is A66 million, the real debt is only around A48 million, given that in the near future we expect cash inflows of A18 million.

It’s very easy to quote numbers but you have to know how to read the small print in order to interpret them.

Comment on the official’s statement. Is the club’s true debt at year-end ‘only around A48 million’?

AppenedixLO1