Financial reports are standardised measures of a business’ financial health. They are a necessity for publicly traded companies, but this does not mean that they are only useful for large organisations.
If you know what to look out for, these financial reports are great tools for businesses of all sizes. (more…)
When you’re trying to work out how well your business is doing, one of the most powerful tools in your financial arsenal is your profit and loss account (P&L).
This is a simple set of figures that will give you a summary of what your business has spent and sold, normally in a 12 month period.
Crucially, a P&L statement will tell you how much profit or loss your business has made so it’s useful to have a good grasp of it.
Here’s an overview of Profit & Loss Accounts for a small business owner.
You may have heard the expression: ‘Revenue is vanity, profit is sanity and cash is reality’. If ever there was a philosophy which I passionately believe in, it is this.
However, there are three important financial measures, which we need to unpack in this expression. Let’s look at each of them in turn; (more…)