Understanding Business Intelligence
Business intelligence comes down to understanding your key performance indicators. Financial ratios are tools to understand relationships within your financial statements. They help avoid problems involved in comparing your unique company needs, goals, and liabilities. Ratios are computed differently to measure a specific concern. When you are thrown into many numbers on your report, ratios can help measure a specific area and identify significant trends.
Examples of financial statement ratios include:
- Short-Term Solvency or Liquidity: Measures the balance between your current assets and current liabilities. This is also commonly used for short-term lenders, banks, etc.
- Long-Term Solvency or Liquidity: Addresses your ability to meet your obligations in the long term or your financial leverage. This is why they are also commonly referred to as leverage ratios.
- Asset Management or Turnover: These measures indicate the utilization of assets used to generate sales. This is mainly used to help understand inventory and payables.
- Profitability: The one all businesses want to know! Why? Because it focuses on the bottom line – the net income. They are also the most widely used or requested by our clients. More than just the dollar sign, these reports bring insight into how you use your assets and manage your operation.
The Full Cycle CFO Difference
Why Choose Our Team For Your Business Growth?
Accounting is generally known for keeping the books and generating financial statements. This is where the value of accountants stops in some people’s eyes.
At Full Cycle CFO, we offer businesses the next level in accounting expertise: growing your business intelligence. As your outsourced CFO, we add value to those financial statements and help your business interpret them to know your company’s financial health. Reading and interpreting what your finances are saying is key to diagnosing potential issues and helping track progress in your business.
Do you know how to read your financial statements and know your key performance indicators? By having us here to help you better understand your financial statements, you can gain a greater perspective on various things. We can help you interpret specific items like profitability ratios to track your business growth, but we also like to monitor these performance indicators over time. This gives a dynamic picture of your business’ efficacy. Comprehensively evaluating financial statements regularly is key in developing and tracking your business’ strategy. Our team is here to help you every step of the way.