Issue link: http://cp.revolio.com/i/142672
financial record keeping and management repayments, or a capital expenditure for a personal computer. Keeping a watchful eye on fixed costs (like rent) and ensuring prices are competitive are among the most important things a practitioner can do to stay afloat, Magos says. Your cash flow statement will help you determine whether money is coming in as quickly as it is going out. If it isn't, you might need to change the way you collect payment for services. "Narrowing, or even closing, cash-flow gaps is the key to cash-flow management," Magos says. Back To Basics focus on is gross profit margin. Gross profit is sales minus cost of goods sold. This is calculated by dividing gross profit by sales for each year covered by the statement. If the percentage has been dropping from month to month or quarter to quarter, perhaps you aren't charging enough or your costs are eating into your revenues. These are also typically prepared monthly, quarterly, and annually. Cash flow statements indicate where your business got its money and how the money was spent or invested. A cash flow statement also indicates a cash surplus or deficit. "Cash flow is like your blood stream," says author and certified financial planner Alice Magos. "It's the lifeblood of your business. Balance sheets. These provide a snapshot summary of the company's assets, liabilities, and owner's equity at a specific point in time. Most businesses take the snapshot on the final day of a specific period; for instance, the last day of the month or quarter. Cash flow. These statements provide summary amounts and sources of cash coming into and going out of the company during the period. Stay afloat. "A lot of business owners add up the money and say, 'We made money last month!' The P&L statement might show a nice black figure at the bottom, but they don't have enough money in the bank to pay their bills with," Magos says. A business can be profitable, yet lack the cash to stay afloat. That's because additional cash went out the door—cash not reflected in the P&L statement— for things like rent deposits, loan Each business day, record every purchase made and each bit of income received. Each month, you should take care of these tasks: replenish petty cash, making sure you have recorded all withdrawals; balance the checkbook; send any due payroll taxes; print and set aside a copy of the account registers; print and examine copies of your financial statements; take any needed corrective actions as a result of this financial statement review. The accounting firm of PriceWaterhouseCoopers recommends keeping tax records and annual financial statements forever. Monthly financial reports should be kept for three years. Keep sales records, purchase receipts, and cancelled checks for six years. SPH