The Fundamentals of Financial Planning-Charles R. Green & Associates, Inc.

Profitability and having enough cash flow to meet commitments are the two main goals of any company. In this section, the Income Statement and Cash Flow Statement play a significant role. The Income Statement shows how well a company is operating, while the Cash Flow Statement shows how well it manages its cash. In one hand, there’s profit or loss, and on the other, there’s liquidity. Do you want to learn more? Click Financial Planning-Charles R. Green & Associates, Inc.

The key is to strike a good balance between profits and liquidity, which can be difficult to achieve if not properly prepared for. Fast growth with high profits will deplete a company’s liquidity, so profitability is no guarantee of survival. The current and estimated Cash Flow and Income Statements’ purpose is to assist you in identifying problem areas so that you can efficiently prepare for them, such as raising more money, infusing more equity, or securing financing. Furthermore, these two points assist you in identifying areas where you can improve control and management, avoiding the need for additional resources and financing.

The Cash Flow and Profit & Loss Statements are included in the Breakeven Analysis. The Breakeven Statement and Chart are critical since they display the necessary revenue amount from sales to precisely balance the total of your fixed and variable expenses. When it comes to the following situations, the Breakeven Analysis can be extremely useful:

The Balance Sheet documents the past consequences (or lack thereof) of business decisions and forecasts the impact of future plans. The company’s Liquidity and Owner’s Equity are reported on the Balance Sheet. The Income and Cash Flow statements have a significant impact on these factors. The balance sheet is a financial statement that is often ignored, but it has a lot of value:

On a monthly, quarterly, and annual basis, a Budget Analysis compares a company’s actual performance to projected performance. The budget is an excellent method for avoiding unnecessary as uncontrolled expenditures, and it is closely linked to the company’s Strategic Objectives.