Description
Balance sheet (management balance sheet)
The balance sheet is a report that combines the results of the P&L and Cash Flow statements into one. The document helps to control the correctness of the accounting, directions of use of profit, receivables and payables.
If Cash Flow is conducted by almost all companies, and OPU analysis is the standard for medium and large businesses, then the management balance sheet is practically not used. However, this report allows you to combine two previous reports and check the correctness of their compilation. From the balance sheet, the owner can get information about what the company owns, and how the company’s profit is distributed, or what the loss is financed from. The balance sheet consists of two main groups – assets and liabilities.
The balance sheet shows: payables and receivables, the amount of unfinished production in the organization, the amount of taxes that must be paid. On the basis of the management balance, the main indicators of the financial condition are calculated.
P&L (Profit and Loss Statement)
Allows to estimate the profitability (profit) of the company. A P&L consists of income and expense parts, with expenses in this financial statement usually having a deeper breakdown by expense item.
If the management report on profits and losses will help to determine those projects (business segments) that generate zero or negative profitability, then the P&L helps to focus on those areas of business that bring real profit. The accrual method is used to generate the report, i.e. obligations that have not yet been paid can be taken into account.
Several profit indicators are used for analysis, the main of which are:
• Marginal profit
• Gross profit
• Operating profit
• EBITDA
• EBIT
• Net profit
Cash Flow (cash flow report (Cash Flow)
The simplest and most intuitively understandable is the Cash Flow report. This report is used in almost every company – it allows you to get a tool for monitoring payments, mandatory payments and cash gaps in the shortest possible time. As a result, the owner gets a complete picture – how much money the company received, what it spent on, how much is left.
With the help of the cash flow report, you can find out how much the company is ready to generate cash flow to support current activities, as well as for the development of the company and covering loans. Often, for the purpose of financial management, a weekly cash flow forecast is used – a payment calendar.