We believe in demystifying finance for everyone.
Today, we're breaking down the basics of financial statements - the essential tools for understanding your business's financial health.
Why Financial Statements Matter
Financial statements are the report card of a business. They tell you where the money came from, where it went, and where it's currently sitting.
Whether you're a budding entrepreneur, a new business owner, or just keen to understand the financial world better, grasping these documents is your first step to financial literacy.
The Big Three
1. Balance Sheet:
Imagine taking a snapshot of your business's financial situation at a specific moment in time. What you have is a balance sheet. It shows what your business owns (assets), what it owes (liabilities), and what's left over for the owners (equity).
2. Income Statement (Profit & Loss Statement):
This document tells you how well your business performed over a period, detailing your revenue, expenses, and profits (or losses). It shows whether your business is on the path to financial success or needs some interventions.
3. Cash Flow Statement:
This tracks the flow of cash in and out of your business over a period. It helps you understand how well your company manages its cash, pays its bills, and funds its operations and growth.
Our Top Tips for Beginners
Start Simple:
Focus on understanding the key components of each statement and how they relate to each other.
Look for Trends:
Analyse these statements over multiple periods to identify trends that can inform your business decisions.
Ask Questions:
Never hesitate to ask your accountant for explanations. No question is too basic when you're learning to navigate financial terminology.
How We Can Help
We're passionate about giving our clients the knowledge and tools they need to succeed. Our regular, personalised reviews guide you through every step of your financial journey.
We can help you understand your finances and how best to drive your business forward.
Call us today on 01284 834216.
We're fast, friendly and helpful. And we won't bamboozle you with jargon. 😊
