November 27, 2015 7:00:17 am

Financial Statements – Do you know the rest of the story?

By William F. Jones, Jr

Properly prepared financial statements tell the financial story of your business. Some aspects are clearly presented. The income statement tells if you are profitable, the balance sheet tells what you own, who owes you, who you owe and future commitments. The cash flow statement shows where cash is spent. This is important and useful information, but by digging a little deeper, you can get the rest of the story.

Ratio analysis and a little research will at a minimum tell you how you compare to your competition. Further interpretation of specific ratios and trends can answer many questions including; ideal inventory levels, when you can expect to cash collections, whether you are able to meet future obligations and when to hire the next employee, just to name a few. What story do you want to hear today.