Understanding Your Financial Reports Part 3

The Profit & Loss or Income Statement

The Profit & Loss shows how much revenue and profit a company has generated over a certain period.

Profit & Loss Year for a Month

This report is useful because it gives the monthly income and expense figures. You can see which of your income streams is generating the most income and what your major expenses are.

Profit and Loss Monthly Comparison

The Comparative Report options include choosing to report a specific period, a month, a quarter etc. and compare it to the same period from the previous year. Reporting can include the amounts only, the difference in percentages, or the difference in amounts.

Another very useful report is the Comparative Income statement that covers 2 fiscal years with the difference in percentages. It provides an overall look at the performance of the business over the past fiscal 2 fiscal years which can assist you with the budgeting and planning for moving forward and growing the business.

The Cash Flow Statement describes the inflow and outflow of cash throughout the period. This report is recommended and can be generated from most accounting software.Cash flow can be a huge problem for growing businesses. By examining the Balance Sheet you will be able to see how “healthy” the business is. It answers the question “where has my money gone?” and it shows if the business is adequately funded.

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