5 Accounting Reports to Analyze Your Business

When operating a startup or a small business, you manage millions of tasks at a time. One reason why most businesses fail is the financial aspect. Therefore, it is vital to pay close attention to different accounting reports. Eager to know about different accounting reports? You must hire a Tulsa accountant! In this article, we have listed some major accounting reports to analyze your business. So, here we go!

Five accounting reports for analyzing your business

1. Income statement

The income statement gives a concise overview of the company’s earnings and outlays for a given time frame, usually three or five years. This report displays the net profit or loss after all costs have been subtracted from sales. Further, it aids in evaluating the company’s profitability. Businesses can find opportunities for cost savings. Further, it promotes revenue growth by examining trends in income and expenses.

2. Balance sheet

The balance sheet depicts the financial situation of a company. It enumerates the shareholders’ equity, liabilities, and assets. Grabbing the business’s liquidity and solvency requires a thorough grasp of this report. Businesses can assess their capacity to pay short-term obligations by comparing current assets to current liabilities. Long-term financial stability and the total capital structure can both be assessed with the use of the balance sheet.

3. Cash flow statement

The cash inflows and outflows from financing and operating operations over a particular period are depicted in the cash flow statement. Understanding how successfully the company makes enough cash to pay off its debt and cover operating costs requires reading this report. Planning for future cash requirements, controlling liquidity, and making sure the company can continue operating without overly depending on outside funding are all made possible by doing a cash flow analysis.

4. Accounts receivable aging reports

This report lists the sums that customers owe the company and the duration of time they have been past due. Businesses can identify past-due accounts. Further, they take necessary measures to boost collections by grouping receivables into age-specific categories. Effective accounts receivable management lowers the chance of bad debts and supports stable cash flow.

5. Budget vs. actual report

The business’s anticipated financial performance (budget) and actual outcomes are compared in the budget vs. actual report. By highlighting differences between projected and actual numbers, this study sheds information on forecasting accuracy and the efficacy of budgetary restrictions.