Every year is a journey for a business. You begin with a set of objectives for the months ahead, probably encounter a few bumps along the way and, hopefully, reach your destination with some success and a few lessons learned. The middle of the year is the perfect time to
Do bad sales months often take you by surprise? If so, don’t forget the power of business flash reports — that is, snapshots of critical data for quick, timely viewing every day or week. One specific way to use them is to track bookings vs. shippings. Doing so can help
“That’s just the cost of doing business.” You’ve probably heard this expression many times. It’s true that, to invoke another cliché, you’ve got to spend money to make money. But that doesn’t mean you have to take rising operational costs sitting down. Cost control is a formal management technique through
In 2014, a new accounting standard on how to recognize revenue from contracts was issued by the Financial Accounting Standards Board (FASB). Now the IRS is allowing a new automatic change in accounting method for businesses to use to conform with the new financial accounting standard. This will allow for
If your profits are decreasing compared to revenue and assets, your financial statements may provide insight into what’s happening and how to improve your performance. Watch for red flags As you sell more and invest in additional assets, profits should, in theory, increase by a proportionate amount. However, that’s not
We live and work in an era of big data. Banks are active participants, keeping a keen eye on metrics that help them accurately estimate risk of default. As you look for a loan, try to find out how each bank will evaluate your default probability. Many do so using
Management wants to paint the rosiest possible picture of a company’s financial performance and may look to "creative" accounting. But aggressive earnings management, or “spin,” can mislead investors and lenders. Here are some ways U.S. Generally Accepted Accounting Principles (GAAP) can be manipulated to obscure the truth. Creative accounting vs.
As the term suggests, for-profit companies are driven primarily by one goal — to maximize profits for their owners. Nonprofits, on the other hand, are generally motivated by a charitable purpose. Here’s how their respective financial statements reflect this difference. Reporting revenues and expenses For-profits produce an income statement (also
Breakeven analysis can be useful when investing in new equipment, launching a new product or analyzing the effects of a cost reduction plan. The breakeven point is fairly easy to calculate using information from your company’s income statement. Here are the details. Analyzing your costs Breakeven can be explained in
Your business financials — where they stand currently and where they might be going next year — are incredibly important. Obviously, sales and expenses play enormous roles in the strength of your position. But a fundamental and often-overlooked way of making your cash flow statement shine is to minimize inventory
