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  • The Balance Sheet – A Storytelling Perspective – Non-current assets

    The Balance Sheet – A Storytelling Perspective – Non-current assets

    This is Part 1 of a six-part blog series exploring the story told by the balance sheet. As a business owner or operator, I believe that understanding the balance sheet—and maintaining control over it—is essential for running a healthy and sustainable business.

    Part 1: Non-current Assets – Long-term Choices

    The Balance Sheet Begins with Choices

    The balance sheet is often read backwards. Many readers jump straight to equity, check whether the numbers “look fine”, and move on. By doing so, they miss the beginning of the story.

    Because the balance sheet does not start with financing.
    It starts with choices.

    Non-current assets tell the story of decisions made with a long-term perspective. These figures are not random – they reflect strategic thinking, investments, and priorities formed over several years.

    What Are Non-current Assets – Really?

    From a technical standpoint, non-current assets are resources intended to be used over time. From a storytelling perspective, they are better understood as:

    Everything a company has chosen to tie up capital in, believing it will create future value.

    This may include:

    • buildings and premises
    • machinery and production equipment
    • IT systems and software
    • intangible assets such as development costs or rights
    • long-term financial investments

    The common factor is not the type of asset, but the time horizon.

    Non-current Assets as a Strategic Story

    When reading this section of the balance sheet, one key question should be asked:

    What has the company chosen to invest in?

    A high level of non-current assets may indicate:

    • growth ambitions
    • efficiency-driven operations
    • capital-intensive activities
    • long-term strategic commitments

    A lower level may suggest:

    • a flexible business model
    • service-oriented operations
    • conscious risk reduction
    • outsourced infrastructure

    Neither approach is right or wrong – they simply tell different stories.

    Capital Commitment – Strength and Vulnerability

    Non-current assets often provide stability. They enable production, support operations, and create barriers to entry. At the same time, they come with clear trade-offs:

    • capital is tied up
    • flexibility is reduced
    • strategic mistakes are harder to reverse

    As a result, non-current assets reveal as much about a company’s risk appetite as they do about its ambitions.

    Book Value versus Real Significance

    The figures shown on the balance sheet rarely tell the full story on their own.

    • depreciation may significantly reduce book values over time
    • intangible assets are difficult to measure accurately
    • fully depreciated assets may still be critical to daily operations

    For this reason, non-current assets should never be interpreted in isolation. They provide context, not conclusions.

    What This Section of the Balance Sheet Does Not Reveal

    Despite their importance, non-current assets do not explain:

    • whether investments have been profitable
    • how much cash the business generates
    • whether past strategic choices remain appropriate going forward

    Those answers only emerge when this section is viewed together with other parts of the balance sheet and the financial statements as a whole.

    From Long-term Decisions to Day-to-Day Operations

    Non-current assets show where a company has committed its long-term resources.
    They explain direction, not daily execution.

    The next part of this series moves from strategy to practice.

    Part 2: Current Assets – Operations in Motion.

  • Annual Financial Statements 2025: How to Make Them a Useful Management Tool in 2026

    Annual Financial Statements 2025: How to Make Them a Useful Management Tool in 2026

    As we enter 2026, the preparation and approval of the 2025 annual financial statements is approaching. For many companies, this process is seen primarily as a compliance exercise — something that must be completed to meet statutory requirements and deadlines.

    However, annual financial statements can be much more than that. When used correctly, they provide valuable insight into performance, profitability, and financial risk, and serve as a solid foundation for decision-making in the year ahead. At the same time, they have limitations, particularly if the work is rushed or lacks proper analysis.

    So what should companies focus on at the start of 2026 to ensure the financial statements are actually useful?

    1. Data quality before speed

    One of the most common pitfalls is prioritising fast completion over reliable figures.

    Key focus areas:

    • Thorough reconciliation of all balance sheet accounts
    • Cleaning up old outstanding items
    • Proper accruals and documented accounting judgments

    High-quality figures create trust in the numbers. The downside is that this requires more effort early on, but it often saves time later.

    2. Understanding the result — not just reporting it

    The final profit or loss is of limited value without context.

    Key questions:

    • What actually drove profitability in 2025?
    • Which items were one-offs, and which are recurring?
    • Are margins sustainable going into 2026?

    This analysis is rarely visible in the published accounts, but it is essential internally.

    3. Cash flow — the overlooked reality check

    Profitability and liquidity do not always move together. This makes cash flow analysis critical.

    Focus on:

    • The link between profit and operating cash flow
    • Working capital tied up in receivables and inventory
    • Liquidity buffers for the coming year

    Cash flow often provides a more realistic view of financial health than profit alone.

    4. Use the balance sheet actively

    The balance sheet is more than a formal appendix — it tells a story about resilience and risk.

    Review areas such as:

    • Equity development and solvency
    • Debt structure and maturity profile
    • Dependence on owners, group companies, or key customers

    A useful question to ask: How would the company cope with a weaker year ahead?

    5. Notes and accounting policies — where the explanations live

    Notes to the accounts are often treated as a formality, but they contain critical explanations.

    Use the notes to:

    • Clarify accounting judgments and estimates
    • Document key accounting principles
    • Ensure consistency year over year

    The value of good notes often becomes apparent only when reviewing several years of accounts.

    6. Connecting the accounts to 2026

    Annual accounts look backwards by nature, but their real value lies in how they are used going forward.

    Link the financial statements to:

    • Budgets and targets for 2026
    • Identified improvement areas
    • Strategic decisions on growth, cost control, or investment

    A practical approach is to prepare a short internal “lessons learned” summary based on the annual accounts.

    Conclusion

    Annual financial statements will always have a formal and statutory purpose. That structure is a strength — but also a limitation if it becomes the only focus.

    Companies that extract real value from their accounts:

    • start the process early
    • prioritise data quality
    • analyse both strengths and weaknesses

    Done right, the 2025 annual accounts become more than a closing exercise — they become a better starting point for 2026.

    Important:
    The annual financial statements must be approved and signed within six months of the balance sheet date (by 30 June). Submission of the accounts must be completed no later than 31 July. https://www.brreg.no/en/submission-of-annual-accounts/?nocache=1768241928976