Your 3 Most Important Financial Reports

Financial ReportMany business owners think that financial statements are too hard to understand. And even if they know what they mean, they may not know how to use them. As a result, the checkbook balance is often the only report they want to know. However, your company's checkbook does not tell you everything you need to know!

The Health of Your Business

A good set of financial statements will give you valuable insight into the health of your business, including these seven important pieces of information:
  • How your company has performed financially over time
  • Whether you have a sufficient "cushion" against a business downturn
  • How you stack up financially against competitors in your industry
  • Whether you have spent too much or too little on equipment
  • How you're doing at collecting the money your customers owe you
  • Whether you'll be able to make payments on your outstanding loans
  • Whether you can afford to pay yourself more than you have in the past
You can find out all of this information and more in three basic reports. Here are your three most important financial reports: Your Balance Sheet Your Income Statement (also called a Profit/Loss Statement) Your Cash-Flow Report (Projection) Tweet This

A Plan to Succeed

As a business coach, I encourage every business owner like you to have these in hand before you do your annual business planning. They will inform you as to the areas in which you are doing well and the areas in which you need to make changes. I also encourage you to review all three reports at least monthly. As your money shifts, your strategy and planning should shift accordingly. Before we continue with additional blog posts, ask your bookkeeper or CPA for a current copy of each of these reports. They are easily generated on Quick Books. Begin familiarizing yourself with each of these, and we will discuss how to use each report in the next series of posts.

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