Dear M & M: The year is closing fast. Anything I should take a look at, financially? — Joan

Dear M & M: Three financial documents everyone should be looking at is a Balance Sheet, Income Statement and Cash Flow Statement.

A Balance Sheet is a summary of how your business is doing at a particular point in time. It shows all the company’s assets, liabilities and equity.

The Income Statement should show if you are making or losing any money during the time period analyzed.

Finally, a Cash Flow Statement should show where the money is going. Money comes in a business and money goes out. A cash Flow Statement can monitor when it happened and where the money went.

Cash flows in and out of a business three ways. Cash from operations (revenues and expenses), cash flows from financial activities (loans and loan repayments) and finally cash flows from investing activities (assets purchased and assets sold). After you have looked at your balance sheet, income statement and cash flow statement, you can look deeper and check on some financial ratios to see where you are at.

Current Ratio, Total Debt Ratio and Profit Margins can be generated easily with the above financial documents in front of you.

The next step is industry comparisons and your own company’s past performance from prior years or even just last month.

In today’s environment, every business needs to have a Balance Sheet, Income Statement and a Cash Flow Statement. What are your company’s financial goals? Have you even set some? Are you even aware of what a good Debt-to-Equity ratio should be? Do you know what your Debt-to-Equity ratio is? Time to talk to your accountant, banker or business advisor.

Alan Lakein said it best, “Planning is bringing the future into the present so that you can do something about it now.”

ASK M&M is prepared and submitted by Mark Schmitt, director of the Small Business Development Center at Cochise College; and Mignonne Hollis, executive director at the Arizona Economic Development Foundation. To ask your questions: Call the Small Business Development Center (SBDC) at Cochise College (520) 515-5478 or email or contact the Arizona Regional’ Economic Development Foundation at (520) 458-6948 or email;

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