What should you know about your business’ financial wellness?
- Financial statements are written records that convey the business activities and the financial performance of a company.
- The balance sheet provides an overview of assets, liabilities, and stockholders’ equity as a snapshot in time.
- The income statement primarily focuses on a company’s revenues and expenses during a particular period. Once expenses are subtracted from revenues, the statement produces a company’s profit figure called net income.
- The cash flow statement (CFS) measures how well a company generates cash to pay its debt obligations, fund its operating expenses, and fund investments.
Why do a financial wellness check-in on your business?
A company’s financial position tells investors about its general well-being. A financial analysis of a company’s financial statements—along with the footnotes in the annual report—is essential for any serious investor seeking to understand and value a company properly.
Financial statements are written records that convey the business activities and the financial performance of a company. Financial statements are often audited by government agencies, accountants, firms, etc. to ensure accuracy and for tax, financing, or investing purposes. Financial statements include:
–Balance sheet
-Income statement
-Cash flow statement
It is wise to stay on top of these statements and your monthly bookkeeping so that you have everything organized not only for taxes but in the case you were to be audited.
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