You need a foundation to build knowledge upon, the ability to create, read and understand basic reports. This entire process starts here - understanding how your business makes money. Today's show is Business Finance 101 - what standard reports are available and what story does it tell.
Given the 3 standard financial statements (Balance Statement, Income Statement, and Sources & Uses of Cash), you will be able to interpret the financial performance of the business and improve future decision making.
EPISODE 21: Summary
We now start week 2 of the series and specifically how to get a handle on your key financial reports. This is a two step process. It starts with you becoming intimate with the standard reports and using it to then build custom reports based on what you learn from the Balance Statement, Income Statement, Cash Flow Statement. The second step is finding at a minimum a CPA and the best case is a fractional CFO to handle the reporting so you can spend your time discussing the implications of past, present, and future decisions.
EPISODE 22: BALANCE STATEMENT
The Balance Statement is a picture of an event - the business's financial position at the end of each month. Its purpose is to provide a clear picture of your assets, liabilities, and equity. Assets are what you own that drives revenue or supports business operations. Liabilities are long-term or additional obligations you have to gain assets. Equity is the leftovers when taking on liabilities to acquire assets.
The Balance Sheet divides assets into groups: Current and Non-Current. Current Assets are usually under 12 months old and can be easily converted to cash.
EPISODE 23: INCOME STATEMENT
The Income Statement is a picture of the process - business conducted over the month. It is also known as the Profit and Loss Statement or P/L. It tells the business owner the level of profitability over the month. This a critical document for bankers and other lenders to determine if the business is a good risk. It is a picture of Revenues & Gains, and Expenses & Losses. It explains how the Balance Statement changed from month to month.
EPISODE 24: CASH FLOW STATEMENT
The Cash Flow Statement explains the process - how the Income Statement (P/L) created the Balance Statement. It reorganizes the information from the Income Statement into: operations, investing, financing, and supporting.
Next Show/Chapter 9: Establishing BEP - Break Even Point
How to apply today's show to your business:
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