The document provides an overview of essential financial statements including cash flow statements, income statements, and balance sheets, explaining their purposes and how to utilize them for business management. It emphasizes the importance of planning, checking actuals against plans, and taking corrective actions where necessary. Additionally, it offers resources for obtaining accounting help and software for effective financial management.

1. Understanding Financials
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2. Financial Statements
• What are financial statements?
– Cash Flow Statement
– Income Statement (P&L)
– Balance Sheet
• Do you know what the statements
show?
• How do you use the statements to
start and manage your business?
Understanding Financials 2

3. Find An Accountant
• Seek an accountant to establish
accounting procedures
• Use software programs (such as
QuickBooks) available to do number
crunching
• Call San Antonio’s CPA Society for
reputable names of accounts who
understand your business type:
3Understanding Financials

4. Cash Flow Statements
• Used to plan start-up costs including
working capital
• Prepared monthly in advance for startup
and regular operations
• Used to plan your flow of cash, to make
sure that you have money to pay your
bills on time
• Check actual vs. plan, then take
corrective action where needed
• It is NOT a profit and loss statement
4Understanding Financials

5. Sample Cash Flow Statement
5
Begin Month 1 Month 2
Cash on Hand $ 25.0 $ 4.8 $ 6.2
Cash Receipts
Cash Sales 0.0 15.7 17.2
Collections 0.0 0.0 4.9
Other 5.0 5.0 5.0
Total Cash Available $ 30.0 $ 25.5 33.3
Cash Out (used)
Beginning Expenses $ 20.8 2.5 0.0
Variable Costs 0.0 8.4 15.9
Fixed Costs 4.9 4.9 5.7
Principle on Debt 0.0 1.0 1.0
Owner withdraw 0.0 2.5 2.5
Total Cash Expenses $ 25.7 $ 19.3 $ 25.1
Ending Cash Available $ 4.8 $ 6.2 $ 8.2
Understanding Financials

6. Income Statements
• Plan Income & Expense in advance
• Check Actual vs. Plan
• Sales and Expenses in line with
Business Plan
• What is Gross Profit vs. Net Profit?
• You should produce a Profit and Loss
Statement at the end of every month
• Take corrective action where indicated
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7. Sample Income Statement
7
2009 2010 2011
Net Sales – after allowances, etc. $ 701.4 $ 694.1 $ 744.8
Variable Costs
Materials 122.5 137.4 118.5
Labor 276.9 284.4 293.1
Travel 70.1 58.2 65.3
Fixed Costs
Administration 89.9 88.1 82.9
Advertising 24.9 29.6 34.3
Overhead 76.3 95.7 86.2
Total Expenses $ 660.6 $ 693.4 $ 680.3
Operating profit $ 40.8 $ 0.8 $ 65.5
Understanding Financials

8. Balance Sheets
• Assets = Liabilities + Capital
• Snapshot of the business. Tells the condition
of the business at a particular date.
• Periodic Balance Sheets give you a
continuing picture of the progress the
business is making. (Positive or Negative)
• How much you own. How much you owe.
• What are your Assets and Liabilities
• How much capital do you have in the
business.
• Produce at least quarterly.
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9. Sample Balance Sheet
9
2009 2010 2011
Cash $ 0.5 $ -8.1 $ -3.6
Accts. Rec. 125.1 138.1 168.2
Inventory 8.1 8.3 8.5
Total Current Assets $ 133.7 $ 138.3 $ 173.1
Net Fixed Assets $ 35.1 $ 26.1 $ 33.1
Total Assets $ 168.8 $ 164.4 $ 206.2
Accts. Payable $ 8.5 $ 16.0 $ 24.0
Credit Card Outstanding 6.5 5.8 3.5
Bank Line of Credit 9.5 14.0 2.0
Total Current Liabilities $ 24.5 $ 35.8 $ 29.5
Long Term Liabilities 28.0 26.0 31.0
Total Liabilities $ 42.5 $ 61.8 $ 60.5
Total Net Worth
(stock & retained earnings)
$ 126.3 $ 102.6 $ 145.7
Total Liabilities and Net Worth $ 168.8 $ 164.4 $ 206.2
Understanding Financials

10. How To Use Your Statements
• For planning ahead
• To check Actual vs. Plan
• To determine how you are doing
• Taking action where needed
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11. Resources for QuickBooks & Accounting Software
• Adult & Community Education offered
by local school and college districts
• UTSA SBDC program
11Understanding Financials

12. Get Connected & Learn More
Email us at: smallbiz@mygenfcu.org
Sign Up for our business classes
Connect with us via social where we talk personal and small
business tips to help you reach your money goals
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