Every business is different, but each one also has to adhere to some basic financial rules.
FINANCIAL STATEMENTS...measure the financial condition of a company, and tell you how much money it is making...or losing. The most common statements used are the balance sheet and income statement. The most important statement however, and one that is often overlooked, is the CASH FLOW STATEMENT. If you don't understand how these reports work, get your accountant to explain them to you. If your accountant can't explain how these reports work - especially the Cash Flow Statement - in PLAIN ENGLISH, get a new accountant.
BUDGETS...No one likes to use budgets! Somehow, the word "budget" evens sounds dreary.....BUT, good budgets are an essential part of any well run business. You should look at a budget as a means to plan and control your operations, not some sort of negative, restrictive activity. Also, all managers in the business must be closely involved in putting together a budget. A budget will not be effective if it is considered the property of the beancounters.
FINANCIAL RATIOS...are formulas which use different figures in the financial statements and compare the results to other companies and industry averages |
