Recall that your P&L, or income statement, is like a movie in that it covers a period of time within your business. Your balance sheet is more like a snapshot in time since it is taken on a particular date in time (for example, December 31, 2019).

The balance sheet is a record of the things you own and what you owe. Like the P&L, it is a very useful tool to compare with the same date in time for previous years to determine how your business is performing year to year.

An important note about the balance sheet is that if you are using cash-based accounting, your accounts receivables and inventory will not show up on your balance sheet. This can make a significant difference in the wealth within your business and your financial statements. Your banker will typically refer to your balance sheet to determine your retained earnings (wealth) in the business.

A common error I see business owners making is taking too much cash out of the business rather than building wealth. When you do this, you are putting your business at greater risk in the event something goes wrong.

If you would like to have a better understanding of your financials and how to increase top-line revenue and bottom-line profit, give us a call. We are experts in business. 503-312-3145

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The P&L (profit & loss), or income statement, is simply a report of your revenue minus your expenses, which equals profit. As my last blog post explains: profit is not cash but the theory of cash.

Your P&L is like a movie of a period of time in your business. Your P&L is a lagging indicator of what has already occurred in your business in the previous month, quarter, or year to date (YTD). It is essentially an old movie since you tend to get the information weeks after the month or quarter has closed.

The most effective use of your P&L is as a comparison tool to see how your business is doing compared to the previous month, quarter, or YTD. What is most effective is to compare it to the same period of time for the previous year or several years to measure progress in your business.\

As a business owner, it is imperative that you understand your P&L and use it as a comparison tool to help you to ask better questions to make better decisions. If you would like help understanding your financials, give us a call. 503-312-3145

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We have all heard that “cash is king.” The origin is unclear, but it has been attributed to Pehr Gyllenhammar after the global stock market crash in 1987. At that time Mr. Gyllenhammar was CEO of the Swedish car group Volvo.

The maxim is used to reflect the belief that cash is more valuable than any other form of investment. Cash is typically considered to be the most liquid asset.

According to my mentor and friend Phil Symchych, cash is not king because the ace is more important than the king. Instead, Phil says, “Cash is not king, it’s the Ace.”™

Without cash your business cannot survive. A lack of cash is like Kryptonite to Superman. Cash is indeed the ace in your business.

If you would like to learn how to generate more cash in your business and thrive rather than survive, give us a call. We are experts in business and helping businesses get into better cash positions.  503-312-3145

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