Episode 8: Reporting & Understanding your numbers
Learn how to read your financial statements and use your numbers to grow your business.
Understanding financial statements is one of the most valuable skills you can develop as a small business owner. These reports go beyond raw numbers. They tell the story of your business health, highlight potential red flags, and provide a roadmap for smarter financial decisions.
In Episode 8 of The Accounting Edit podcast, Leah from Orca Accounting and I break down the three essential financial statements every business owner needs to know: the balance sheet, the profit and loss statement, and the cash flow statement. We share how to interpret these reports, spot common issues, and use them to strengthen your bookkeeping and overall financial management.
Why Financial Statements Matter for Small Businesses
Financial reporting is not just for tax season. Regular reviews of your financials give you insight into revenue, expenses, and cash position, helping you make informed choices about growth, hiring, and investments.
The Balance Sheet: A Snapshot of Business Health
Your balance sheet shows what your business owns and owes. It is the clearest picture of assets, liabilities, and equity. Negative cash balances or unusual activity on this report can signal deeper financial issues that need attention.
The Profit and Loss Statement: Tracking Revenue and Expenses
The profit and loss statement, also known as the income statement, helps you see how much your business is earning and spending over time. Using percentages and expense categories makes it easier to analyze trends and understand which areas of your business are most profitable.
The Cash Flow Statement: Following the Money
Profit does not always mean positive cash flow. The cash flow statement shows how money actually moves in and out of your business. It reveals whether you truly have the funds to cover expenses, pay yourself, and reinvest in growth.
Spotting Red Flags in Your Numbers
Financial statements reveal early warning signs that something is off. Consistent losses, rising expenses in one category, or declining cash flow can indicate issues that need immediate action. Regular reviews help you stay ahead of these problems.
How Advisory Services Add Value
Working with an advisor or CPA can help you make sense of complex financial data. Advisory services translate numbers into insights you can act on, making it easier to grow your business with confidence.
Building Strong Financial Habits
Make it a habit to review your balance sheet, profit and loss, and cash flow statement each month or quarter. Categorize expenses accurately, watch for percentage changes, and identify trends. Developing financial literacy as a business owner is one of the best investments you can make in your company’s long term success.
🎙 Listen to Episode 8: Reporting and Understanding Your Numbers
Connect With Us
theaccountingedit.com
Aminder Mann, CPA
Website: sequoia-cpa.com
Instagram: @sequoiacpa
LinkedIn: Sequoia CPA
Leah McCool
Website: orca-accounting.com
Instagram: @orcaaccounting
LinkedIn: Leah McCool
Keywords: financial statements, cash flow, profit and loss, accounting, business finance, red flags, advisory services, financial literacy, small business, bookkeeping