Notwithstanding the absence of bank debt, a large law firm can still collapse under a structure of extreme financial leverage. The message “We have no debt” is not the same as “We have no financial risk,” though that is how the message is normally received, and probably meant to be received.
The debt/equity entries on the right side of the balance sheet match up to the assets on the left side. Understanding how those simple elements interrelate leads to questions, and the answers can reveal significant insights to firm financial strength and stability.
(Reprinted with permission of The Daily Journal Corp (2012)
Firefox recommends the PDF Plugin for Mac OS X for viewing PDF documents in your browser.
We can also show you Legal Updates using the Google Viewer; however, you will need to be logged into Google Docs to view them.
Please choose one of the above to proceed!
LOADING PDF: If there are any problems, click here to download the file.