What Numbers Are You Missing…?

Does your accountant supply you with a complete set of financial information each month? If not, why not?  If so, do you understand what those key pieces mean?  More important, do you use that important data to help you make smart decisions about your practice?

The right financial information can help you solve problems and it can help you take advantage of opportunities.  These three pieces give you a complete view of your business performance.

The Balance Sheet – The balance sheet is usually dated the end of the quarter or end of the year and gives you a snapshot of your assets and liabilities at that point in time.   The balance sheet gives you an indication if the business is solvent (more assets than liabilities), is liquid (having enough cash to cover short term obligations), and what the company assets consist of.

The Income Statement – This is also called the statement of earnings or profit/loss (P&L) and shows you if the company has made (or lost) money over a specific period of time.  Using only the Income Statement can be very dangerous to your business.  The income statement does not track cash in the bank, so the number on the bottom of the income statement (net profit) is not cash you can spend.

Cash Flow – This is the one statement you really can’t do without.  Cash is real and tangible, what you have in the bank, going in and going out.  Cash information is where you settle up what you paid out and getting in, the cash flow tells you if you are turning profits in to cash.

Using these three pieces together allows you, the business owner, to better manage your business and to optimize its performance.   As a super star owner you need to look at net profit on the income statement, operating cash flow from the cash flow statement, and the return on assets derived by taking the net profit divided by the average assets from the balance sheet.

Are your numbers lagging? Click Here to schedule a consult to see how things can improve!

Andrew Vertson, PT, DPT, ATC
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