Only a handful of financial metrics are needed to understand a company’s health. You can certainly get fancy and go crazy with ratios, charts, and dashboards, but keeping it simple will get you 80% to understand your company. Cash balance Knowing the cash balance daily helps you understand if you have enough to fund operations. It’s a good indicator of whether you must ramp up cash collections or slow down cash expenditures. ...
Financial statements are made of small building blocks. To understand the financial statement and make better business decisions, you must understand how the building blocks fit. Accounts are the smallest building blocks. Accounts, sometimes called general ledger accounts, are the smallest building blocks. It’s where your transactions are recorded. For example, when you spend money on office supplies, you’ll record it in an Office Supplies account. Accounts are grouped in broad categories and numbered: ...