Financial statements provide a snapshot of your business’s financial health. Here’s a quick overview of three essential ones:
Income Statement (aka Profit & Loss Statement, P&L)
This statement shows your revenue, expenses, and profit (or loss) over a specific period. It tells you how much money your business made or lost. Think of it as your business’s report card.
Balance Sheet
This statement shows your assets (what your business owns), liabilities (what your business owes), and equity (the owner’s stake) at a specific point in time. It gives you a picture of your business’s financial position.
Cash Flow Statement
This statement tracks the movement of cash into and out of your business. It shows how your business generates and uses cash, which is crucial for staying afloat and growing.
Understanding these financial statements empowers you to make informed decisions about your business. They provide valuable insights into your financial performance and help you identify areas for improvement.
