Financial statements become useful when you can connect each figure to a business question. These guides explain profit, margin, break-even, balance sheets, cash-flow statements and the difference between accounting performance and available cash.
How to Use These Guides
Start with the question closest to the decision or problem you are dealing with. Read the qualifications and examples as carefully as the headline answer, then confirm current rules with the relevant official source or a professional who can consider your full circumstances.
Understanding Your Numbers Guides
My Business Is Making a Profit — So Why Is There No Money in the Bank?
Your profit and loss statement records income and expenses over a period.
How Do I Read a Profit & Loss Statement Without Being an Accountant?
A P&L shows revenue, direct costs, gross profit, overheads and net profit.
What Is a Balance Sheet — and Why Should a Business Owner Care?
It shows assets, liabilities and equity at a point in time.
What Is a Cash-Flow Statement — and What Is It Telling Me?
It tracks actual cash moving into and out of the business.
Revenue, Gross Profit, Net Profit and Cash — What's the Difference?
Revenue is sales; each later measure answers a different question.
Is My Business Actually Profitable?
Profitability isn't measured by whether cash is available.
What Is a Healthy Profit Margin for My Business?
There is no single healthy margin that applies to every business.
What Is Break-Even — and How Much Do I Need to Sell Before I Start Making Money?
Break-even is where total revenue equals total costs.
Which Products, Services or Customers Are Actually Making Me Money?
Compare revenue and direct costs at a useful segment level.
General Information
These guides provide general information only. They do not take into account your individual circumstances and are not a substitute for professional accounting, taxation, legal or financial advice.
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