Financial statements are records of your business expenses, revenue, and everything that involves monetary transactions. These records are snapshots of a company’s financial health. Without this, you might not be able to monitor and project future finances, revenue, or plan for better earning. However, financial statements should be processed in a particular order for the best results. Let’s take a look at what statements are important for business success.
- Balance Sheet: It monitors the financial progress over time. The balance sheet contains liabilities, equity, and assets. It is a significant indicator of the financial health of your company. The balance sheet is a crucial thing that helps you make financial decisions.
- Cash Flow Statement: The outgoing and incoming cash record of your business is known as a cash flow statement. Finances, investments, and operations are the 3 main cash flow management components. It just tracks the cash that your business has on hand. Lenders, vendors, and investors can use cash flow management to figure out whether your business has a great investment or not.
- Statement of Retained Earnings: It is also referred to as the owner’s equity statement. It is the profit amount that you can use to make investments or pay off your liabilities. You can use it independently or as a balance sheet’s part. If this statement is positive, then you have additional money to pay off your debts or buy assets.
- Income Statement: The income statement records your business’s profit and loss over a particular time. You can utilize it to summarize the operations of your business for a particular period that can be quarterly, monthly, etc. It demonstrates your net loss of income to you.
Since doing these statements right is required, a trained accountant in Castle Hill can help.