Understanding the financial details of your business – and, at times, being able to communicate them to others – can mean the difference between success and failure. Informed business owners pay attention to the numbers that show whether a business is profitable, has cash flow problems or is spending too much in certain areas. Analyzing financial data also can help you set business objectives on a monthly, quarterly or yearly basis. Here are three reasons to organize and study financial statements:
Get an overview of how your business is doing and where it is heading.
Keep control of general and administrative expenses.
Careful records can help attract investors to your business.
Action Steps
The best contacts and resources to help you get it done
Discover the details of different financial statements
The income statement and balance sheet are the main parts of a financial statement. Income statements, also called profit and loss (p&l) statements, show the money in (income, revenue and sales) and money out (expenses and costs) of a business. What's left over is the profit. Balance sheets show what a company owns and what it owes. A cash flow statement looks at ways cash enters and leaves a company.
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