You might naturally gravitate towards these five numbers on your financial statement, and these figures are a great start for understanding your current financial situation.
But, this is just a starting point.
Looking at your financial statement on a deeper level means looking past the numbers to see the whole picture.
“I have clients that come to me proudly, stating that they often look at these five numbers on their financial statement:
They sit back in their chair, feeling satisfied with their response. I simply ask them the question, ‘How are you going to make actionable changes to your bottom line with those five numbers?’”
They typically don’t have a response.
Those numbers are important, but they don’t provide details to make significant changes in your business.
I can’t make this point enough for my clients— details are going to be the game-changer in changing your business’ bottom line,” says Larry Chester.
One way to dive into the details is to look at the numbers behind those five standard numbers. This information can be found in subsidiary reports. The data from these reports provide the opportunity to make substantial changes in your business.
So, how do you think your business measures up? Look through our “How do you measure up?” blog post to find out, and answer questions including:
These questions are the beginning steps of getting accurate details about your current financial situation. They help you understand variations in calculations, and how to relate them to your business’ performance and operations.
Let’s dive deeper into what ratios you should look into for more details surrounding your financial report:
The devil is in the details. Your financial reports will always consist of two (sometimes three) reports:
These three reports provide a broad look into the performance and condition of your company. Once you look past the summary numbers, more details can be found in the subsidiary reports.
The necessary details in the consolidated financial statements can provide broader knowledge on topics such as:
Next time you receive your financial statement, remember it’s crucial to look past your sales, gross margin, sales expense, operating expenses, and net income. Have these details made you reconsider your current financial grasp of your business? Learn if and when you need a fractional CFO on our blog post now.
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