Financial Statements are documents that show how your business is doing financially and operationally.
As the statements are historical, they show you how your business has been operating in areas such as profitability, cash flow, assets and liabilities.
The three financial statements that Australian SMEs mostly use are broken down into these categories:
- Profit & Loss Report: displays the profitability of a business over a period of time. Also known as ‘income statement’.
- Statement of Financial Position: summarises all business assets and liabilities at a particular moment in time, to show how much money remains if the business were to sell all assets and paid off all debts. Also known as ‘balance sheet.
- Cash Flow Statement: displays how much cash is moving in and out of business over a certain period.
These statements are important to help you:
- meet any regulatory requirements
- understand and manage the overall success of your business
- plan for future growth.
They should be prepared at least annually. The accountants here at Balanced Beans help businesses prepare financial statements to ensure their financial information is accurate, up-to-date and presented in a way that’s easily understood.