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Business owners – do you get a stack of financial reports every month and glance at them and don’t really know what you’re looking at? Yeah, I hear that a lot. Financial statements can be very confusing for non-financial folks. So today I’m going to go over the big three financial statements and then in subsequent videos, we’re going to take a deep dive into each one. So let’s go.
I’m Judi Otton with GrowthCast and I’m a Fractional CFO and I love teaching business owners this kind of stuff.
So the first financial statement that most business owners are very comfortable with or relatively comfortable with, is a Profit and Loss Statement also known as an Income Statement. Those are synonyms of each other. So this statement will show you how much profit you’ve made over a period of time. So it will likely be for the month or for the year to date. Now profit is what’s what you sold minus what you’ve spent gives you your profit. And again, we’ll dive into the details of this in future videos.
The second financial statement that’s a little bit less commonly understood is a Balance Sheet, a balance sheet shows a snapshot in time of what you own and what you owe. So what your assets are and what your liabilities are. And at the bottom, it will show you the net worth of your business.
The third financial statement and this one is the least understood and frankly, I think in a lot of cases, the most valuable, is a Cash Flow Statement, and this shows the cash that has come into your business in the period. This one again is also for a period of time. Typically you run this one for a month or maybe a year, the cash that’s come in and the cash that’s gone out.
Now again, I’m going to dig into each one of these in detail. So subscribe to my YouTube channel (https://www.youtube.com/c/GrowthcastCash) to get the next video where we’ll talk in-depth about the Profit and Loss Statement. This is Judi Otton with GrowthCast and I’ll see you next week with your Fiscal Fitness Tip of the Week.