5 Financial Business Reports You Should Be Reading

5 Financial Business Reports You Should Be Reading

Let’s face it. Business owners never really have a shortage of something to do. Whether it’s putting out fires, helping to bring on new hires or even just handling day-to-day business operations, business owners are busy people! This means reading through financial business reports isn’t something that necessarily makes the top of their list.

If you are one of those business owners nodding your head yes at this statement, it might be time to prioritize a bit differently. Reading financial business reports can mean all the difference in gaining valuable insights that can help with the development of your business.

Reviewing reports on a consistent basis can help to improve the financials of your business, especially when reviewed with your accountant. We know that finding the time to research the best financial business reports to read can be difficult, which is why we’re here to provide you with the top five.

Get a better picture of your business at the financial level so you can make your payments and expand your business to its full potential!

Balance Sheet

This financial statement summarizes a company’s entire assets, shareholders’ equity, and liabilities at a specific time. It provides a big picture of a company’s financial position, usually at the end of an accounting period.

Get an overview of your business’s financial positioning and see what your company owes, owns, and where the financing for those resources is coming from.

The balance sheet is a beneficial financial business report to read as it can help to identify trends that can be used to make better financial decisions.

Cash Flow Statement

The Cash Flow Statement is a financial report that only accounts for cash flow activity. It does not include any other activities like sales or credit purchases. The cash flow statement works to blend the information from both the balance sheet and the income statement.

This statement is ideal for business owners looking to get a handle on their cash flow as they can get a solid summary over the selected period of time. You can easily see which areas are generating or using the most cash within your business.

Profit and Loss Statement

P&L is the short version of the profit and loss statement. This statement displays the amount of revenue a business has generated over a certain amount of time.

A profit and loss statement also shows the money that was used to generate those profits and revenues. It also looks at any losses that may have occurred. Business owners can look to the profit and loss statement to see how their marketing efforts, pricing, and expense management may be influenced.

We talk a lot more about understanding your profit and loss statement in this blog post.

Net Profit Margin Over Time

Business owners can better manage their pricing, sales, and expenses with this financial business report. The net profit margin is tracked over several quarters and years.

Tracking net profit margin over time is useful for comparing a business’s margin to that of others within the industry, or to itself. It has the ability to show how many cents in profit every dollar of sales produces.

AR Days vs. AP Days

AR days and AP days are different however, both can influence a business’s cash situation. AR Days stands for Account Receivable Days. It is the number of days remaining until a company is to be paid for its products and services.

AP Days stands for Accounts Payable Days. It means the amount of time it’s taking a business to pay its suppliers.

By looking at AR days, you can determine if receivables are adding up more quickly than sales made. Or more quickly than the company’s ability to collect. AP days indicates the amount of time it is taking for the business to pay suppliers.

Understand Your Business’s Financial Reports

Getting a clear understanding of your business’s financial reports can be difficult. Not to mention evaluating them against other financial business reports to help maximize your business.

We can work alongside you to help evaluate your financial reports and develop a game plan to grow your business. We’ll track your progress and provide monthly reporting. This will help to give you a detailed look at how your new business financial strategy is accomplishing your overall objective and impacting your company.

We also offer a wide range of other services in addition to the financial statements mentioned previously. For more information on how we can help you implement a new financial business strategy or make yours more effective, please contact us at 865-212-0063.

Did you enjoy this article? Here are three more you might find useful:

From Shoebox to Success: How to Update Your Business Financial Records
5 Fundamentals of a Successful Financial Business Strategy
5 Bookkeeping Questions Every Business Owner Must Be Able To Answer

No Comments

Post A Comment