When you own a business, big or small, it’s easy to get lost in the day to day operations and put aside the big picture: growth. There’s so much to do, from increasing sales to administrative tasks, even organizing the office Christmas party. There’s always a pile of to-dos that seems to never decrease. In order to remain successful, and keep being prosperous; Your Bookkeeping Department suggest you run financial reports regularly to analyze your business performance. It will help you keep the eye on the ball so to speak, give you valuable perspective on the development of your business, and allow you to make corrections along the way.
What are the different types of financial reports?
There are various financial reports, from balance sheet statements to cash flow statements to net profit margins over time reports and more. Each financial report has its objective, and all work together to give you a clear view of how the business is doing. In other words, these reports help you analyze your business performance. It provides unmatched insights into what’s really going on, because it’s based on collected data. There are no assumptions with financial reports, they’re all about verifying how your company is doing. These statements also ensure accuracy with auditing agencies, investors, creditors and so on.
Balance sheet statement – business performance
The balance sheet is a financial report that lists your assets (what you own), your liabilities (what you owe), and the difference between the two (the equity). These can include cash, property, inventory, debt, employees’ wages and so on. A balance sheet offers a business owner the big financial picture.
Cash flow report
Cash flow statement measures how a business manages its cash position; how does it generate cash to pay its debt and fund its operating expenses. This financial report helps you know where the money is coming from and how it’s spent. For example, cash from investing activities vs. operating activities such as from sales and interest. Cash flow reports are all about the financial health of your business.
Profit and loss statement
The income statement also called the profit and loss statement allows you to see the revenue generated during a specific number of months. The Miami bookkeepers remind you that it also allows you to see the costs generated from those revenues and the profits and losses (if any) that resulted. The income statement findings helps you figure out your next move in terms of strategy. Do you want to increase your advertising budget? Do you want to decrease your inventory purchases? Do you need to make a change in your product prices? The income statement can help you make changes that’ll help you grow the business.
Net profit margin over time
Net profit margin over time is another financial report worth doing when you analyze your business performance. It tracks profit over several quarters and even years, allowing business owners to better price their products and services, reduce expenses and manage sales efforts. The net profit margin over time statement also allows you to compare your business’ financial health to that of the competition and industry as a whole.
AR and AP
Accounts receivable days versus accounts payable days reports allow you to see if receivables are piling up faster than sales or when you’re able to collect. Accounts payable influences how long you take as a company to pay back suppliers and vendors, which in turn influences cash flow. Miami bookkeepers suggest you keep running these financial reports to help your business grow year after year. The insight is extremely valuable, and will help develop more profits along the way.