Can you believe we’re already in the 3rd quarter and year-end is quickly approaching? This is a good time to review financial statements and the story they tell. Let’s discuss why these reports matter and why accurate bookkeeping is critical:
Balance Sheet
The balance sheet is an indication of the overall health of a company. Are you reinvesting in your business, or are you extracting all the profits? Are you over leveraged? Examining your assets, liabilities, and equity will help you understand where you stand.
Profit & Loss Statement
This report summarizes your income and expenses incurred over a period of time. Here, you can learn about your profit margins, what your largest expenses are, and how sales have changed over time.
Cash Flow Statement
Analyzing your cash inflow and outflow over different departments allows you to understand your business’s cash needs. Cash from operations, investing, and financing will show a business owner what is coming in and out. Having a healthy cash flow statement allows opportunities to grow, to be nimble, and to reinvest.
Do you understand the story your financials tell? Are they giving you the information you need? Is there too much or too little information? If any of these questions pertain to you, please contact us.