Every business owner, no matter the industry or organization size, needs to understand the importance of maintaining and reviewing financial statements.
Think of these statements as a map of where the money for your business is coming from and where it is going. These statements are true records of your financial activity. These are the documents that let you understand the financial health of your business and allow you to make smart financial moves in the future.
These are the three types of financial statements:
Income Statement: This statement displays your company’s new income growth or loss. The statement covers a certain period of time. You may hear your accountant refer to this as your profit and loss statement. Or “P&L” for short.
• Balance Sheet: This document looks at your business’s net worth at a given point in time. This is the document you turn to when you want to get a feel for where you stand regarding assets and liabilities and equity.
• Cash Flow Statement: Cash flow is the lifeblood of any business, and this statement shows the money that is going out of the business and the money that is coming in. This also covers a certain time period. This statement leaves you knowing where you stand when it comes to the cash you have available to you.
In this blog we have only covered the basics of financial statement and how to review them. Reach out to our team for more information on how to use the information provided to you on these statements to better grow your business.