P-Aid

Posts Tagged ‘Financial’

One of the hardest aspects of being an entrepreneur is staying on top of some things you may not like to do because you either don’t enjoy them or simply aren’t good at them…or both.  Doing math back in school just wasn’t fun for me.  I enjoyed almost every other subject except anything to do with numbers as there seemed too many rules and exceptions to remember.

Most entrepreneurs do not enjoy numbers.  They are happy to relegate the task of debits and credits or journal entries or double entry book-keeping to someone who enjoys it.  Define your core competencies and what you do well and then delegate to other people who have the right skill set and aptitude to do the things they do well.  In simple business terms it’s called outsourcing.

The problem with outsourcing your personal and business finances is that you can lose track of what all entrepreneurs call the bottom line or their net worth.  For different reasons the bottom line tends to move around a bit.  I’m not talking about the monthly bank statement bottom line, I’m talking about “taking money off the table” of your business and investing it and moving this into your personal finances such as your 401K, investing in property or some other form of long term investment. Read the rest of this entry »

Company financial health refers to the current stability of a business’s finances. Regular financial checkups can help business owners spot and remedy weaknesses in their financial management to avoid unwanted losses.

A company’s financial health is analyzed by examining its financial statements for a given period of time, usually at the end of the fiscal year. When analyzing financial health, business owners take into account profitability, liquidity, debt, and equity. This information is found in the Income Statement, the Balance Sheet, and the Statement of Cash Flow.

The Income Statement details a company’s revenue, including where it came from and how it was spent. The Balance Sheet shows the current assets, liabilities, and working capital of a company. If the total assets are greater than the total liabilities, the company is in good shape. However, if the total liabilities are more than the total assets, the company is in bad financial health.  The Statement of Cash Flow illustrates how a business gains the funds needed to operate the business and how those funds are used. Read the rest of this entry »