This article takes a look at the importance of the main three financial statements every business needs to review on a consistent basis.
The Balance Sheet (aka “The X-Ray”)
The balance sheet provides a business owner a sense of its company’s health by showing assets, liabilities, and equity. This financial statement is a snapshot in time.
The Income Statement (aka “The MRI”)
The income statement gives a business owner a measurement on its profitability. It is usually prepared at the end of the business’ financial year. The formula is this: (Revenue + Gains) – (Expenses + Losses) = Net Income or Net Loss.
The Statement of Cash Flows (aka “The EKG”)
The statement of cash flows shows all cash receipts and cash expenditures in a given time period. It has three main groupings: operating, investing, and financing activities. It provides insight as to how a business is managing its money.
This trio of reports provides a 360 degree view of your business and is essential to its health and future prosperity.
Get your financial house in order by contacting a certified bookkeeper or tax professional today! The health (and compliance) of your business depends on it.
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