Show Me The Money

Financial statements including cash flow, balance sheets, and income statements are crucial to understanding the what, when, why, and where the business stands over a period time.  At the year-end, assembling all accounting information on revenues and expenses recorded during each accounting period helps to show the profitability of the business over the course of the year. 

Accurate and timely financial statements are an important aspect to any medium or small sized business with lenders or growth plans involving investors.  -Mickey Randolph

Starting with financial statements, these are formal records of the financial activities and position of the business or entity and represents the financial health of the operation.   In preparation for the end of the fiscal year, the business’ financial statements are designed to show how much money was made, how it was spent, how much money is owed, along with any variances that may have occurred throughout the reporting period.  Knowing the narrative of prior performance, along with positive or negative changes, formalizes the projections for the future of the business. 

As the familiar phrase “Show Me The Money Jerry” indicates, investors and lenders want to know how much money is in the business bank account.  At the year-end, every company should not only want to know, they NEED to know, what’s the bottom line before tax reporting deadlines hit in the New Year.   The cash flow statement summarizes the amount of cash (or cash equivalent) coming and going from the company. Does the business have enough money to fund its operating expenses?  Is there enough revenue to cover lending obligations? As a mandatory part of any business’ financial reports, the cash flow statement provides the owners and investors an understanding of how well the company manages its operations.

It’s important to mention, cash flow does not indicate net income, which is determined by the balance sheet or income statement.   The income statement considers not only cash flow, but also future revenue and outgoing expenditures. At the year-end, it’s important to detail the balances of income and expenditures over the preceding reporting periods and clarify the total financial position of the business.  As one of the major financial statements in any company’s accounting portfolio, the balance sheet is a snapshot at a moment in time to see what the company owns (assets), owes (liabilities), and the amount of equity each stakeholder has in the game.  

Having a clear understanding of the numbers helps business owners and investors plan future financial decisions of the business.  Getting ahead and showing your money accurately, timely, and concisely is the best play in the year-end playbook.  

By Susan Amsler

November 12, 2019

Randolph Business Resources, LLC.
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