07. The Importance of your Reports

Creating, reading and understanding your financial statements and reports is key to understanding the health of your business.  You need to know how much money you have, what is coming in the door, how much is going out, who you owe and who owes you. 

This is key to making key decisions to help you grow, prosper and succeed.

1. What’s a Profit & Loss Statement?

  • Income statements provide you with the total amount of income earned and the expenses paid during a specific period.
  • Will be the total of all income sources, cost of goods sold, payroll, operating expenses & overhead.  It will not include Balance Sheet costs such as shareholders or owners’ disbursements.
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Read: Why is a P&L Important

2. Just what is a Balance Sheet?

  • Balance Sheets give you a snapshot of what you own, what you owe, what is owed to you and what you are worth.
  • Accounts Receivable (what is owed to you) and Accounts Payable (what you owe) are reflected in this report.
  • Money you have put into your business, taken out and the balance are included in this report.
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Read: Why a Balance Sheet Matters

3. Importance of the Cash Flow Statement

  • Cash Flow statements provide you with information about how much money flows into your business, how much flows out, and what is left over.
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Read: Cash Flow Is King

This is a great website for small business resources from the team at QuickBooks Canada: https://quickbooks.intuit.com/ca/resources/