They provide insight into the health of a company, as well as information on assets, liability, income and cash flow.
It needn’t be a difficult process if you break it down into stages;
The first part is your balance sheet, which shows your business as it stands. You may have different forms of assets and liabilities all at once. If you’re confused as to what means what, it is worth looking at an online finance dictionary to clarify things.
Next comes your income statement and cash flow. Cash flow is broken down into operating, investing and financing activities, which actually makes it simpler to see what’s coming and going. You can find templates online if you find Excel to be an intimidating prospect!
Accountants can be expensive, so this detailed new infographic from Business Backer will help you through the flow of creating a business financial statement:
A Visual Guide to Your Business Financial Statement, courtesy of Business Backer.
Photo Credit: Getty Images