In some businesses, CEOs often focus on the product or services being offered and rely on others to manage the finances. Bank balances, receipts and payments are easily understood, but things like accrual basis accounting, ratios and working capital can be confusing.
There are certain financial statement indicators that can alert management of potential issues that need to be addressed.
- Ongoing losses
- Aged and possibly uncollectible receivables
- Slow-moving or obsolete inventory
- A reduction in gross profit as a percentage of sales
- Liabilities that exceed assets
- Increased overhead
- Loan covenant violations
- The need to refinance long-term debt or obtain addition sources of financing
The professionals at Davis & Hodgdon Associates CPAs can help you identify these alerts and be prepared for any future issues. Call 802-878-1963 or visit www.dh-cpa.com for more information.