You don’t have to be a CPA to understand which numbers are most critical to the health of your business. Having a strong relationship with your accountant is a must for any business owner – however, as a business owner the financial health of your business is ultimately your responsibility.
The most critical numbers of your business can be found on three very important documents a balance sheet, income statement and cash flow statement. Below is a quick review of these basic financial documents that track the flow of money within your company.
A statement of the assets, liabilities and capital of a business at a particular point in time. This is a cumulative document from the time you started your business, reviewing your balance sheet will give you a good perspective on the financial strength and capabilities of your business.
This document otherwise known as a profit and loss statement or P & L, lists your company’s income minus your company’s expenses during a specific period of time-usually a fiscal quarter or year. These records provide information that shows the ability of a company to generate profit by increasing revenue and reducing costs.