Why Financial Reports Matter Most owners did not start a company to read financial statements. Yet, your reports tell the story of your business far better than your bank account ever could. You do not need an accounting degree to understand the basics. Mastering three core financial statements allows you to spot issues early, make smarter decisions, and have more productive conversations with your advisor. 1. Profit & Loss Statement (Income Statement) Your P&L acts as a report card for a specific period, answering one critical question: “Did my business make money?” 2. Balance Sheet While P&L tracks performance over time, the Balance Sheet offers a snapshot of your financial standing today. 3. Cash Flow Statement A profitable business can still run out of cash because profit and cash are not the same thing. Look Beyond Revenue It is easy to celebrate growing sales, but revenue alone tells an incomplete story. Regularly ask yourself: Evaluating all three statements together provides a complete picture of your financial health. Track Trends, Not Just Single Months Financial statements become powerful when compared over time. Instead of asking how you did this month, look for trends: Spotting these trends early reveals opportunities—and problems—long before
You might find yourself asking why you were not approved for a loan or credit card. That decision was made based on many factors. Some of those reason might be because there is a history of not paying on time, you do not have any credit yet, or you are adding too much debt into your accounts. If you are looking to improve your credit score, I will be listing some tips as well as what goes into your score. First, we will be breaking down the categories in which they use to determine your score. Credit Score History Credit Utilization Ratio This ratio once again is made up of how much you owe and how much available credit you have. You want to keep it low because you do not want to give the image that you need all the money, they are handing you. Lenders basically want to see your money habits as well as your organization and responsibility with their money. This is because they want to ensure that their money is going to return, which is why they usually grant it to those with higher scores. A higher score is usually an indication of low risk