What Your Financial Statements Are Really Telling You
Introduction
One of the most valuable skills a business owner can build is understanding what financial statements show and how to use them
Money is important for every business. But how do you know if your business is doing well? Financial statements help you understand your money. They show what you own, what you owe, and how much money you make or spend.
Balance Sheet
A balance sheet is like a list. It shows what your business owns and what it owes. Things you own are called assets. This can be cash, tools, or a truck. Things you owe are called liabilities. This can be a loan or money you need to pay. The balance sheet helps you see if your business is strong or needs help.
Income Statement
An income statement shows how much money your business makes and spends. Money you earn is called income. Money you spend is called expenses. If you make more than you spend, that is a profit. If you spend more than you make, that is a loss. This statement helps you see if your business is making money.
Why These Matter
Knowing your numbers helps you make smart choices. You can see if you can buy new tools, hire help, or need to save money. It also helps when you talk to the bank or the tax office. Good records make your business stronger.
Conclusion
You don’t need to be a math expert to understand your business. Financial statements use simple ideas. They help you see what is working and what needs to change. With a little help, you can feel good about your money.
