Every business includes three important financial statements: the income statement, the cash flow statement, and the balance sheet. These documents together provide an overview of your finances. But what do these figures actually do? A lot of companies prepare management accounts to get the most out of these numbers. We suggest hiring professional accountants in Yeovil for accurate recording of the data. Here are some essential things about management accounts you must know.
A Brief Guide About Management Accounts
What are Management Accounts?
Management accounts are financial reports that provide in-depth insight into a company’s financial performance. Business owners and management teams usually use them to make informed strategic decisions. This is why they are called management accounts.
Typically, management accounts are prepared on a monthly or quarterly basis. This allows you to understand how well your business is doing and areas that need corrections. Surprisingly, there is no correct or particular standard way to prepare management accounts. Every set of management accounts is unique to that business.
What are the Important Components of Management Accounts?
There is no mandate for what must be included while preparing management accounts. But the usual management accounts revolve around profit & loss accounts, income statements, cash flow statements, and balance sheets. But, using KPIs is equally important to ensure how well your business is performing. A professionally competent management accountant can provide you with all these services efficiently.
We will discuss the five essential components of management accounts here:
- Key Performance Indicators
- Balance Sheet
- Profit & Loss Statement
- Cash Flow Statement
- Executive Summary
Key Performance Indicators (KPIs)
Choosing KPIs wisely is essential as they are industry and business-specific. You must consider these statistics with the help of financial and demand forecasting. These numbers can make you understand whether you are in line with the long-term goals of your business.
Balance Sheet
This is one of the most important financial statements that can accurately depict a firm’s financial standing.
Profit & Loss
A profit & loss statement is an important indicator that forecasts the actual performance of a business against monthly, quarterly or annual projections.
Cash Flow
This statement helps a business to maintain its financial health. They are typically recorded and amended every month.
Executive Summary
The executive summary consists of vital monthly highlights. This may include the net profit margins, incurred losses, turnover ratio etc.
Hire The Experts
Whites Chartered Accountants offers excellent accountancy services. You can trust our highly qualified accountants in Yeovil to handle your business financial statements and other such services.