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Posts Tagged ‘Financing’

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 »