Guide to Your Financial Reports

Your financial reports tell the real story of your business. They reveal whether you are growing, efficient, and sustainable. The more you understand them, the better decisions you can make.

Here are the key reports to focus on:

1. Trading Account.
Shows sales and direct costs, allowing you to calculate your gross profit. This tells you how much each sale contributes to overheads and profit.

2. Profit and Loss Statement.
Summarises income, costs, and taxes to show your net profit. Use it to assess whether your business model is profitable and sustainable.

3. Balance Sheet.
Provides a snapshot of assets, liabilities, and equity at a point in time. It reveals whether your business is solvent and how healthy your finances are.

4. Statement of Changes in Equity.
Shows how profits are distributed or retained. High equity means strength and stability.

5. Shareholder Current Account.
Tracks money introduced or withdrawn by owners. Keeping this balanced avoids tax and cash flow issues.

Understanding these reports enables you to:

• Identify trends and early warning signs.

• Measure the impact of decisions.

• Compare results against budgets and industry benchmarks.

• Strengthen cash management.

You do not have to be an accountant to read your financial reports. You just need to use them regularly. They are not just for filing; they are tools to grow and protect your business.