There are three key financial reports every business owner should understand: the Profit and Loss Statement, the Balance Sheet, and the Cash Flow Statement.
Of these, the Cash Flow Statement is often the most crucial. It tracks money coming in and going out of your business, helping you project future cash needs and avoid shortfalls. Knowing your inflows and outflows ensures you always have enough to cover expenses and plan ahead.
The Profit and Loss Statement (P&L) is just as important. It shows whether your business is making money - highlighting your income, expenses, and margins. Reviewing your P&L regularly (or with your accountant) helps you spot trends, adjust pricing, and manage costs effectively.
Together, these reports provide a clear picture of your business’s financial health and guide better decision-making.
