Are You Familiar with These Essential Bookkeeping Reports?

Financial reporting is one aspect of business management that many business owners find daunting. This is because managing operations already takes up a lot of time, leaving little opportunity for diving into elaborate financial reports every week. Also, to comprehend the fundamentals of these reports, having some financial literacy is imperative. According to experts in bookkeeping services in Bank, here are the most important financial reports that you should be tracking:

1. Balance sheet

The balance sheet provides detailed information about the assets and liabilities of a business at any point. Assets can include cash, investments, accounts receivable, inventory, property & equipment. Liabilities are expenses like loans, wages, tax, rent, utilities and accounts payable. Since the balance sheet only shows finances for a certain period, it provides limited insight into a business’s financial status. It can be compared with the past reporting period. However, it has to be considered along with other reports to ensure greater accuracy. For these reasons, it is better to hire professional bookkeeping services in Greenwich to track this one.

2. Profit & loss statement

Also known as the income statement, the profit & loss statement gives a summary of the total expenses and income of a business over a fiscal year, quarter or month. It includes 3 sections, which are:

• total expenses
• total income
• net profit/net income

It can be used for calculating metrics like gross profit margin, operating ratio and operating profit margin.

3. Cash flow statement

As its name suggests, a cash flow statement keeps track of cash outflows and inflows. It is different from the profit & loss statement and balance sheet as it focuses only on cash movements while excluding non-cash activities. With the help of bookkeeping services in Bank, you can use a cash flow statement to understand when cash can leave and enter your account. This will help in addressing cash flow issues and making informed decisions about budgeting & spending.

Therefore, if you’re a business owner, make sure to track the above financial reports for your company.