Your financial statements are the window into the soul of your business. Learn why.
You are a successful business owner. You are making sales. But you have no idea why you are losing money each month? Are things as good as you believed them to be? Running a successful business is a lot more than just making sales. Are you in the dark because you have no idea what the financial data from your business is telling you? Do you even bother to run the reports necessary to give you this vital information about your company’s financial health?
One of the most important accounting functions your business should be performing regularly is running financial statements, which can include a wide variety of reports on the status of your corporation financially. Whether you hire accounting staff, outsource the work or tackle it yourself, you will be amazed at what data you will find in those financial statements.
5 Things Your Financial Statements will reveal:
- Information: provides information about the results of operations, financial position and cash flow. This information is used to make decisions regarding the allocation of resources.
- Profit: income statements inform the business owner about the ability to generate profit through the revelation of volume of sales, and various types of expenses.
- Current Financial Status: through the review of the balance sheet, the business owner is better able to estimate liquidity, funding and debt position.
- Cash Flow: shows the nature of cash receipts and disbursements by a variety of categories. This is particularly useful as cash flows don’t always match the revenues and expenses shown in the income statement.
- Shareholder Equity: especially important to investors because it shows the changes in various equity components, including retained earnings during a period.
If running or understanding the financial end of your business isn’t quite your thing, don’t forget how vital it is to the success of your company.
It is a sound business decision and investment to outsource these valuable accounting functions to an accountant. Stay on top of the game and have your financial statements ran and analyzed by the professionals.