The End of the Year: Time to Assess Your Business’s Financial Health!
You should periodically take the time to examine your business’s financial health, and the end of the year is a great time to make it happen. Understanding where you stand from an economic perspective is the only way that your company can fix problem areas and steps toward growth.
If you are planning a big move, such as a merger or acquisition, you need to know where you stand financially. However, even if you are not planning a significant change, getting ready for the new year may be a great time to examine your financial future.
Getting Started: Creating Records to Examine
Tracking how your company is doing financially means more than just understanding how much money is in the bank or how the stock market is doing. It requires an in-depth review of all of your financial documents and reports, including:
- Accounts receivable
- Working capital
- Fixed assets
- Inventory levels
- Net income
- Outstanding liabilities
Of course, you cannot examine any of this information if you do not have a meaningful way to track it. If your records are outdated or do not exist in a useful form, you need to make some changes.
Analysis Behind the Numbers
While financial statements are certainly helpful, creating them is not the only step you must take to examine your business’s economic well-being. Instead, you must understand what those numbers and that data tell you.
A simple glance over many records will let you know where you may have problem areas. You can see if sales are declining during certain parts of the year or if expenses jumped drastically. Your statements can also tell you whether or not your company would withstand a significant downturn in the future. Your financial records give you a valuable starting point to make improvements.
There are many methods you can use to determine if your business is sitting well financially. You can examine your liquidity ratio, compare your assets to liabilities, or even merely examine your cash flow to determine whether income is coming in on a regular basis. Each analysis method will tell you something slightly different about your company.
Getting Help with Your Financial Analysis
MaxwellDunn provides health assessments for companies. Our team can examine your financial statements, or even help you create them if you do not have internal processes to track finances. A health assessment will let you know where you stand, how you can improve, and spot problem areas long before they significantly affect your bottom line. If you are ready to take control of your company’s finances, contact MaxwellDunn today to schedule an appointment.