We
can prepare or supervise the preparation of your financial
statements. Compiled, reviewed, or audited statements can
be provided according to your needs.
More importantly,
we can help you use these statements, as well as other reports,
to better manage your business and increase your profitability.
Good
financial records are necessary for several reasons:
| |
Daily
operating decisions are based on financial reports. |
| |
Bank
loans require reports of past performance. |
| |
Tax
return numbers need proper substantiation. |
Prepare
financial reports monthly.
For year-to-date comparisons and to make quick management
decisions, financial reports must be done monthly. "As goes
the month, so goes the year." You can compare the sales, gross
profit, and net profit at, say, the end of May, with prior
years and get a good idea of how the current year will finish.
You can compare the total accounts receivable or payables
with prior years to spot problems and then quickly take corrective
action.
Here
are some common business ratios you should monitor on a month-by-month
and a year-by-year basis:
| |
Current
Ratio - Current assets divided by current liabilities
will measure your ability to pay your current debts. |
| |
Debt
to Equity Ratio Total liabilities divided
by net worth will provide you with a year-to-year comparison
of your ownership in the company. |
| |
Receivables
Outstanding Receivables divided by average
day's sales will give you the number of days'
sales on the books. |
| |
Profit
Margin Gross profit divided by net sales
is one of the most important numbers for you to monitor
regularly. |
You
can learn more about directing your net profit!
If you
would like to learn more about using financial statements
to make sound business decisions, we would be happy to assist
you. No one was born understanding financial information,
but it is easier to learn than most people think.
Please
ask as many questions as you like; we will help you until
you are comfortable with business numbers and can use yours
to increase your profitability.
|
