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Why understanding Financial Statements is important as a business owner

Updated: Apr 19, 2022


Trying to make sense of your financial statements might seem a bit challenging for business owners as the day to day operations occupies most of your time and energy, yet ignoring the financial information is not an option in the business world.


Financial statements comprise the balance sheet, profit and loss (income) statement, and cash flow report. These statements help to uncover financial and operational difficulties and identify the corrective action.


1) The Balance Sheet: is a list of the accumulated assets and liabilities incurred by the business. The difference between the two represents the net worth of the company.


2) The profit and loss answer the question, “How did we do?” and

3) The cash-flow statement answers the question, “Where was the cash used?”


Understanding these statements is crucial since they all tell you what’s happened in the past. But more important from a management perspective is what’s going to happen in the future. Therefore, developing both a profit and loss forecast and a cash-flow forecast is essential to making the historical data more meaningful.


With a forecast in place, you’ll have the ability to get data (via your financial statements) that tells you how you did compare with your plan. You should also be able to figure out what went wrong and how to correct any problems.


 

If you are looking for external audit services that will give you peace of mind knowing your financials are accurate, look no further. We are here to help. You can rest easy knowing our team is committed to providing top-notch service and quality. Our audits go above, and beyond what other firms offer so we can be sure your business is in good hands.


Talk to us, we know every business is unique and that's why we offer tailored services rather than out-of-the-box solutions. Our team of certified professionals will help you manage your business finances with ease. You can trust us to handle your books while you focus on growing your business. With our expertise, we ensure that your company keeps up with changing market


Call us:

Abu Dhabi: 02 641 6751

Dubai: 04 458 0049

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