There are many important considerations businesses must assess in order to continue to make their company thrive. One of these facets is the financials. Today, we at Mark Dicus & Company, LLC would like to discuss what simple analytics suggests about your financials.
Calculate Cash Flow
Your cash flow statement shows how much cash you receive and how much cash you spend for your business during a set time frame. To ensure you’ve got enough to keep going, even when times are tough, using your income statement and balance sheet, this is a key way to make sure you’ve got enough to keep going. Reviewing this regularly on a monthly basis is critical for small businesses who run on tight margins. If your everyday operations are generating enough money for you to basically stay in business, you need to know. You might want to check it more frequently if you are running low on cash. Where it doesn’t give you credit for money that clients owe you but haven’t paid you yet, the best part about this statement is that it really does show your bottom line of the cash in hand. This excludes money from loans and only what you have as a net cash balance. You can spot patterns and red flags. In a nutshell, if you have what you need to stay afloat, but the most important thing about a cash flow statement is that, simply put, it lets you see your liquidity.
Cash Runway Calculator
No business wants to see the money run out, but it is challenging to operate a small business, particularly when you’re first getting started. When every penny count, it is vital to know not just how much money you have on hand today. It is important to know how long you have before you run out of cash if you were to stop generating revenue. If you’re a small business and just starting out, there will be months when you spend more than you make as a worst-case scenario. Understanding how long you can keep doing this, is extremely important. What is known as a negative cash flow is if you spend more than you generate if you have to dip into your savings. For instance, you know that you have 5 months to start generating more cash a positive cash flow if your net burn rate, or how much you generally spend a month for payroll and other expenses is $20,000 a month and you have $100,000 in the bank.
Revenue Growth Rate
Revenue is how much money you take in. The trend that tells if you are actually growing or not, but comparing that figure over time year to year, gives you the big picture. Whether to hire more employees, and even whether to open up a new franchise, it is key for everything from knowing how much to spend on marketing.
Bookkeeping, Accounting Services & More in Walnut Creek, Daly City, San Mateo, Palo Alto, Mountain View, San Jose, Pleasanton & Greater San Francisco, California
Call Mark Dicus & Company today to help you manage your finances through a number of services. We have the expertise and dedication to assist our customers.