There are many financial reports that can be used to gain insight into the business’s past, present, and future financial condition. As a business owner, getting an annual report of this financial data is important because it will help you run the company more efficiently, assess operations better, and make better business decisions.
Here are three of the most important accounting reports that any business owner should study on a daily and annual basis in order to obtain a clearer understanding of the company’s financial results.
1. Balance Sheet
A balance sheet is a financial statement that shows a company’s total assets (current, non-current, and intangible assets), liabilities (financial obligations), and shareholders’ equity (investments and retained earnings) at a certain point in time, usually at the end of an accounting period.
It gives a snapshot of a company’s financial position, including the financial resources available to it.⠀It’ll help you spot trends and make more informed financial accounting decisions Lenders can use it to assess a company’s creditworthiness, so it’s critical.
2. Income Statement
The Profit and Loss Statement (P&L), Statement of Operations, or Statement of Income are all terms used to describe the Income Statement. The Income Statement summarizes the company’s overall revenues and expenditures, as well as its profitability (net income or net loss) for a given time span, typically a month, quarter, or year.⠀⠀⠀⠀⠀⠀⠀
Internal stakeholders (such as the management committee and board of directors) and external stakeholders (such as investors and creditors) use the Income Statement to measure performance and determine risk for an investor or creditor.
For a business to be profitable and valuable, revenues must surpass expenses.⠀⠀⠀⠀
3. Cash Flow Statement
The Cash Flow Statement lists all of a company’s cash inflows and outflows for a given period of time.
This statement differs from the Balance Sheet and Income Statement in that it only accounts for cash money transactions; it ignores non-cash transactions such as sales or purchases on credit, as well as depreciation.
The Cash Flow Statement is divided into three sections: operating, financing, and investing activities, and it shows which parts of the business generate and spend the most money.
One of the most useful applications of the Cash Flow Statement is to forecast potential cash flow, which can help in budgeting and decision-making.
We can Assist
Our highly skilled team can work alongside your internal accounting team or serve as your entire accounting department (from CFO to staff accountant) on an ongoing basis. On a monthly basis, we will regularly provide you with timely and reliable financials and analyses (such as the ones mentioned above), as well as the actionable financial analysis you need to effectively and efficiently run your company.
⠀⠀⠀⠀⠀⠀