5. With a well-implemented Balance
Sheet, you can evaluate your
company’s ability to meet quotas
by calculating yourWorking
Capital or Current Ratio
6. You can also measure turnovers
statistics for accounts receivable
and inventory to assess how
efficiently you are managing key
assets.
7. These are just two examples of how the
information provided by a proper Balance
Sheet can inform accountants. However, there
are various other aspects within them that are
invaluable to understanding the strengths and
weaknesses of your operation.
10. The income statement can supply
a lot of specific information on the
performances of various areas of
interest such as: divisions,
departments, and product lines.
11. The income statement is able to answer questions
such as…
- Is the company experience growth?
- Are you gaining or losing market share?
- Is your pricing strategy keeping pace with costs?
-Are expenses for material, labor or overhead out of
control?
And perhaps more importantly...
-How do your revenue and expenses compare to
your budget?
15. 1) First, even though your company may
recognize revenue for a sale when their
performance obligation has been satisfied,
the revenue cycle isn’t complete until the
payment is received. Bad debts will offset
future earnings when they are reserved.
16. 2)The longer a receivable is outstanding, the
less likely it is to be collected.The accounts
receivable aging report provides a roadmap to
focus your collection activities and manage
your customer base. Collections personnel
should generally pursue the oldest receivables
first, as the prospect of getting paid
deteriorates over time.