Many NJ business owners receive financial statements and aren’t sure what to look for.
The Profit & Loss Statement
Shows revenue, expenses, and net income over a period. Key questions: is revenue growing? Are expenses in line with benchmarks? What’s your net margin?
The Balance Sheet
Shows assets, liabilities, and equity at a point in time. Key questions: how much cash do you have? How much do clients owe you? What’s your total debt?
The Cash Flow Statement
Shows how cash moved — operating, investing, and financing activities. The bottom line shows net change in cash.
Red Flags to Watch
Consistent net losses, declining cash despite profitability, liabilities growing faster than assets, and declining owner equity.
Disclaimer: The information provided is for general educational purposes only and does not constitute tax, legal, or investment advice. This content is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code. Tax outcomes depend on your specific facts and circumstances. Viewing this material does not create a CPA-client relationship. Personalized advice is provided only through a signed engagement letter.
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