When it comes to deciding how fair is a business performing in terms of growth and profit, analysing the financial data and reports can do wonders. Financial data comprises accounting records, transaction reports, and business statements that provide a right overview of how a business is performing. To handle adequate financial management, a business needs to perform regular reporting for all records, transactions, budgets, forecasts, and assets.
- Financial Reporting
Financial reporting with weekly bookkeeping must be carried out on a regular basis and is composed of statements that include:
- Profit & Loss Statements
- Balance Sheet Statement
- Cash Flow Statement
As per the Australian Accounting Standards, companies are required to prepare these reports annually with detailed notes to accounts.
- Management Reporting
Along with financial reporting, what must be monitored and reported is the actual performance of a business against its goals and objectives. To do so, a business can conduct:
- Ratio analysis: to analyse profitability and liquidity
- Tracking KPIs: to measure how effectively a business is achieving its objectives
By analysing the above tools, a business can manage its performance in regard to expectations and actual outcomes.
Forecasting is the process of predicting the future based on past and present reports. With forecasting, a business owner or manager can gain a better understanding of whether their business is heading on the right path to success or not.
The techniques applied in the process include:
- Forecasting based on history or past outcomes
- Forecasting based on market conditions or assumptions
It assists in understanding how a business is performing and its current financial position in the market in terms of financial growth.
A budget is actually a benchmark that provides a report that can be compared with the actual performance of a business. In some terms, it can be compared with a forecast and expressed in dollars or other measurable units.
With a budget report in hand, a business manager can identify if corrective action is needed or not.
If you are concerned about the financial management of your business and need an expert business advisor in Dandenong to assist you in crafting financial plans and reports, our team at KPG Taxation is here to help you out.