I believe the hardest transition in business is the one from Doer to Manager. When a person starts a business, let’s face it, they need to do everything or almost everything. As the business grows, the entrepreneur needs to shed some of his or her duties. They need to delegate. And that is a difficult […]
Author Archive | david lightfoot
Financial Ratio Analysis
Ratio Analysis is the most common tool for analyzing financial statements and what they can tell us about a business. Ratio Analysis starts with the business’s (presumably) accurate financial statements. Those statements provide an accounting picture of the operations (for a period) and the financial position (at a point in time). While financial statements are […]
How to Read a Statement of Cash Flows
The third financial statement, the Statement of Cash Flows, ties the Income Statement and Balance Sheet together. Many, considering that “cash is king,” view this as the most important of the financial statements. It is generally not even prepared, which puts a business owner in the dark about cash. The Statement of Cash Flows, like […]
How to Read a Balance Sheet
The Balance Sheet measures the business’ position at a point in time. It is a snapshot of the business that is often neglected by less than savvy business owners. The American-style Balance Sheet shows the assets on the left side and the liabilities and equity on the right side. The two sides balance, hence the […]
How to Read an Income Statement
The Income Statement is the most frequently used of the primary financial statements. Also known as the Profit and Loss or P&L, the Income Statement measures the results of business operations for a period of time. This contrasts with the Balance Sheet which is the business’ position at a point in time. The Income Statement […]