can prepare or supervise the preparation of your financial statements. Compiled,
reviewed, or audited statements can be provided according to your needs.
More importantly, we can help you use these statements, as well as other reports,
to better manage your business and increase your profitability.
Good financial records are necessary for several reasons:
- Daily operating decisions are based on financial reports.
- Bank loans require reports of past performance.
- Tax return numbers need proper substantiation.
Prepare financial reports monthly. For year-to-date comparisons and to make
quick management decisions, financial reports must be done monthly.
"As goes the month, so goes the year." You can compare the sales,
gross profit, and net profit at, say, the end of May, with prior years and get
a good idea of how the current year will finish. You can compare the total accounts
receivable or payables with prior years to spot problems and then quickly take
Here are some common business ratios you should monitor on a month-by-month
and a year-by-year basis:
- Current ratio — Current assets divided by current liabilities
will measure your ability to pay your current debts.
- Debt to equity ratio — Total liabilities divided by net
worth will provide you with a year-to-year comparison of your ownership in the
- Receivables outstanding — Receivables divided by average
day's sales will give you the number of days' sales on the books.
- Profit margin — Gross profit divided by net sales will allow
you to compare your business operations to other companies in your industry,
as well as monitor your own operations over time.
Understanding financial statements can increase business profits.
If you would like to learn more about using financial statements to make sound
business decisions, we would be happy to assist you. No one was born understanding
financial information, but it is easier to learn than most people think.
Please ask as many questions as you like; we will help you
until you are comfortable with business numbers and can use yours to increase
Dean Miyamoto, CPA Inc.
1600 Kapiolani Blvd., Suite 1670
Honolulu, Hawaii 96814