New to running a business? While passion and hard work are crucial, financial reporting is integral to your company’s success.
Financial reports are detailed documents that provide a thorough overview of your company’s financial performance and position. They can help you:
- Make strategic decisions
- Ensure compliance with tax and legal requirements
- Attract and secure potential investors or loans
- Cut unnecessary expenses
- Understand your business’s financial trends
Take control of your business’s financial health. These six financial reports that can help transform how you manage and grow your business.
- Income statement. Is your revenue growing? Are expenses creeping up unexpectedly? An income statement generally reveals your business’s cost of goods sold, operating expenses, net profit or loss and other metrics that are indicative of whether you’re making or losing money. By regularly reviewing your income statement, you can also identify areas of high spending and gain a broader understanding of your business’s profitability.
- Balance sheet. A balance sheet captures your business’s financial position at a specific moment, breaking down your assets, liabilities and your equity. It offers insights into your business’s net worth, helps track long-term financial stability and is essential for securing loans. That’s why it’s important to verify all entries monthly, ensure accuracy of asset valuations and check for outdated or irrelevant entries to proactively manage your business’s finances.
- Cash flow statement. Is your core business financially sustainable? What is your company’s overall operational efficiency? Positive revenue doesn’t always mean positive cash flow. That’s why tracking your cash flow is so important. This statement displays how cash moves in and out of your business, which can help predict cash shortages, manage day-to-day operations and make more strategic financial decisions.
- Inventory valuation report. An inventory valuation reports help manage your business’s physical assets, tracking current inventory levels, cost of inventory, value of existing stock and inventory turnover rates. It can be very beneficial in helping to track performance metrics like inventory turnover rate and in optimizing your inventory purchasing decisions
- Accounts receivable aging report. This report is like your financial watchdog, tracking outstanding customer invoices, how long invoices have been unpaid and which customers are slow to pay up. Use this report to follow up on late payments and improve your cash collection process.
- Accounts payable aging report. While an accounts receivable aging report manages what you’re owed, an accounts payable aging report helps you manage what you owe. This report provides a rundown of delinquent bills and expenses and payment due dates. Having a handle on your upcoming payments can help prevent late fees and penalties, and assist in your business’s cash flow planning.
Knowledge is power when it comes to your business’s financial health. That’s why the tax experts at Magone & Company can help you best understand your financial reports, interpret them and use the data to make informed decisions.
Reach out to our collaborative team or give us a call today at (973) 301-2300.
This document is for informational purposes only and should not be considered tax or financial advice. Be sure to consult with a knowledgeable financial or legal advisor for guidance that is specific to your business situation.