The Profit & Loss statement (P&L) can give you a good idea of how it’s going. Do you review this report regularly? You should! You’d be amazed what the report can tell you! It might look like a bunch of numbers, but the information in can be used to make important business decisions! Let’s take a look at some of the things you can glean from this report.
At the end of every accounting period review this report, and ask yourself these questions:
- How are my sales/income figures? How do they compare to last month, last quarter, and last year? How are the numbers trending, up or down?
- What does the Cost of Goods look like? Percentage-wise, are the numbers trending up or down?
- What do my fixed costs look like? Am I paying more now in certain expense categories than I was last month, last quarter, or last year?
- How is my business doing overall compared to the past?
Once you’ve asked yourself these questions and considered the answers, it’s time for the biggest questions of all–“Why?” And “What can I do about this?”
Financial statements aren’t just for the tax man–they provide the information you need to run your business.