Understanding Your Financial Statements – Ohio Ag Net
By Brian Ravencraft
Every agribusiness owner and farmer should understand the importance of maintaining and reviewing financial statements.
Think of these statements as a map of where the money is coming from and where it is going for your business. These statements are true records of your financial activity. These are the documents that allow you to understand the financial health of your business and enable you to take smart financial action in the future.
The three types of financial statements are:
- Income Statement: This statement displays the growth or loss of new revenue for your business. The declaration covers a certain period of time. You may hear your accountant refer to it as your profit and loss statement. Or “P&L” for short.
- Balance Sheet: This document examines the net worth of your business at a given time. This is the document you turn to when you want to get an idea of your asset, liability and equity position.
- Cash Flow Statement: Cash flow is the lifeblood of any business, and this statement shows the money going out of the business and the money coming in. It also covers a certain period of time. This statement lets you know where you stand with the money you have.
Make an appointment with your accountant to ensure you receive and review these documents at the right time. As always, if I can help you, please don’t hesitate to contact me.
Brian E. Ravencraft, CPA, CGMA is a Principal at Holbrook & Manter, CPAs. Brian has been with Holbrook & Manter since 1995, focusing primarily on the areas of tax advisory and management consulting services in several areas of corporate services, with a focus on agribusiness and closely held businesses and their owners. Holbrook & Manter is a professional services firm founded in 1919 and we are unique in that we offer the resources of a large firm without compromising the focused and responsive personal attention each client deserves. You can reach Brian via www.agribusinessaccounting.com or www.HolbrookManter.com.