Of all the different numbers in your financial statements, there are FIVE which you need to check on a regular basis, to ensure your business is on track and profitable.

Sales

Check the level of sales you are making. Sales of last month, last quarter and year to date. It’s best to compare this to your budget, to see if you’re tracking in line with your plans.

Cost Of Goods Sold

This is one of the critical numbers for a business that buys goods in, converts them and sells them. 

It’s a measure of how well you trade. Show this as a % of Sales to get the most meaning. It’s important to track this over time and definitely compare it to budget, or benchmark.

Wages %

Wages as a % of Sales, shows the proportion of sales spent on wages. As one of your biggest expenses, it shows how effective your team is. Keep a close eye on this %.

Net Profit

You need to make a profit to survive. So, monitor Net Profit each month, quarter and year to date. Compare this against your budget. Is there a profit? Is it enough?

Current Liabilities

This shows how much you owe suppliers. Include Tax and Super in this to get a realistic figure. Your ability to pay your bills is a key indicator of the financial strength of your business.

These are the key numbers to check regularly. If you’re not happy with any of them, look for ways to improve them.

Let me know if you need a hand.

You can contact Peter HERE