Report Analysis – How to Read the Statements

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Learning to read and analyze financial statements is crucial to the success of the business. If the owner can decipher the information and make good decisions, the company will improve. But to make good decisions, the owner has to be able to understand what they are reading. This section teaches the business owner how to read the financial statements.

These articles are in-depth and are educational in nature. If you are looking for some quick lesson, this isn’t the site for you. It took me seven years of education and 25 years on the job to develop the necessary skills to truly understand financial statements. I can’t teach you nor anyone in 10 minutes or less. I’ve kept the information simple and easy to understand. If you have questions, contact me via the ‘My Services’ page in the footer below.

 

 

FEATURE ARTICLES:

  • Accelerated Depreciation – An Explanation

    Accelerated Depreciation - An Explanation
    When it comes to depreciation, no two businesses are alike. Unlike traditional straight line depreciation where the asset value is costed out to depreciation expense in equal increments over a given life expectancy, accelerated depreciation expenses the cost at higher values during the earlier accounting periods and at a lower amount towards the last half ...
  • Accrued Payroll – An Explanation

    Accrued Payroll – An Explanation
    Accrued payroll is a current liability comprised of four sections. The first is the amount of payroll earned by staff and not yet processed or paid. The second is the dollar value of personal time off accumulated for each employee aggregated into one number. The third consists of payroll taxes owed to the respective governmental authorities and ...
  • An Explanation of Current Assets

    An Explanation of Current Assets
    Current assets carry the most value to the small business entrepreneur because of the cash conversion aspect.
  • Current Liabilities Section of the Balance Sheet

    Current Liabilities Section of the Balance Sheet
    The current liabilities section of the balance sheet identifies those amounts due to third parties within the current year. These include accounts payable, credit card accounts, accrued payroll, taxes, unearned revenue, deposits and those amounts due within one year related to debt instruments.
  • Depreciation – This is Weird Accounting

    Depreciation - This is Weird Accounting
    In the world of accounting, there are two types of expenses on the reports widely misunderstood. They are depreciation and amortization. I will try to help the novice gain an understanding of depreciation in this article.
  • Dividends and Distributions – Use in the Proper Context

    Dividends and Distributions – Use in the Proper Context
    Dividends and distributions refer to the payment of cash to investors. Why are there two separate terms? Well, the term is tied back to the type of entity that makes the payment. Simply stated, regular corporations, i.e. C-Corporations as identified in the Internal Revenue Code use the term ‘Dividends’ and S-Corporations (Small Business Corporations) use the term ‘Distributions’. In ...
  • Financial Statements for the Small Business

    Financial Statements for the Small Business
    Financial statements serve the purpose of presenting economic activity and status related to a particular date and over a particular time frame. Accountants record monetary transactions and via financial reports present the information in an easy to understand format. The financial statements for a small business do not have to comply with those of ...
  • How to Read a Balance Sheet – Simple Format

    How to Read a Balance Sheet - Simple Format
    Reading a balance sheet is instrumental in understanding the business’s financial position. This particular financial report is a snapshot of a moment in time. It can change dramatically in a minute so understanding the perspective of the report and its respective sections will help you to be better informed.
  • How to Read a Balance Sheet – Equity Section (Simple Format)

    How to Read a Balance Sheet – Equity Section (Simple Format)
    The equity section of the balance sheet equals assets minus liabilities. Traditionally the equity section is referred to as the net worth of the company. If you were to dispose of all the assets through a sale and pay off liabilities, the money left over would be available for distribution to the shareholders. The shareholders basically ...
  • Job Costing Reports – Introduction (Part 1)

    Job Costing Reports - Introduction (Part 1)
    Job costing reports are management tools used to evaluate project or production performance against a known or estimated standard. They are used in many business sectors and their respective industries. The primary purpose of job costing reports is to identify discrepancies or beneficial results, usually in the form of financial values. They can be used to report both ...

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