Posts Tagged ‘small business financial statements’

As strange as it may seem, not many do. Financial statements are “ex post”. They reflect what has happened. They are (or should be) the basis for management action – going forward.

They should be compared to a benchmark (either a budget/forecast or prior year financials). You should be looking for:

  • Revenue changes (increase/decrease)
  • Gross profit margin changes
  • Extraordinary (one-time) items.
  • Trade receivable aging
  • Trade payable aging.
  • Debts to the CRA

The issue of whether or not the business makes any money should be supportable by client revenue actuals vs projections and the gross profit margin on this revenue.

There are businesses that don’t bother to generate or analyze financial statements. The bank balance is what they focus on.

Do you have financial statements prepared for your review on a monthly basis?