While the Income Statement is excellent for seeing at a glance whether or not your business is profitable, a deeper analysis can reveal so much more, like how different business units or products are performing, or whether your seasonal business should be a full-year business. The good news: analysis doesn't require much more than 5th grade math skills. In this article, we will examine two ratios of profitability: Net Profit Margin and Gross Profit Margin. Net Profit Margin N

If you've ever heard the phrase, "What's the bottom line?", then you know what an Income Statement is. The "bottom-line" everyone is referring to is the last number at the very bottom of the statement under the last (or "bottom") line called Net Income (also know as Net Profit). Here are 5 other facts you may or may not have known about the Income Statement. 1. The Income shows transactions for a period of time. The Income Statement is not cumulative like the "as of" a date o

The Cash Flow statement is one of the essential financial statements for small-business owners to understand, yet a surprising number of them don't review it with their bookkeeper or accountant. In this article, I will explain what the cash flow statement is, why it's important, and how to read it. What is the Cash Flow Statement? Essentially, the Cash Flow statement shows all the cash inflows and outflows for a period of time, and provides a net cash increase (or decrease) f

Understanding the two major types of accounting is a major milestone in more clearly understanding your financial statements.