Gain Profit From Your Balance Sheet Part 1

Working With Your Melbourne Accountant To Gain Insight

So your Melbourne accountant has furnished you with monthly financial reports. The problem is, you can’t make sense of it. Your balance sheet for one is a goldmine of information, that is, if you know how to use them.


This is why it is critical for business owners to coordinate closely with their Melbourne accounting firm or Melbourne accountant to gain better insight from financial records. Keep in mind that those monthly reports are not just for compliance purposes. These are furnished to guide you through your decision making as well as provide you a whole picture of how your business is doing.

The Balance Sheet

One of the most overlooked financial reports by CEOs is the balance sheets. They simply look at the bottom figures or ask their bankers questions about it. The best person you want to discuss your financial records with is your Melbourne accountant.

This one page actually offers a wealth of information and a host of lucrative opportunities for your business.

Whether you choose to work with a Melbourne accountant or a Melbourne accounting firm, here are a few tips to know you can use those balance sheet information and turn it to your advantage in increasing your business profits:

Quick Ratio

Using the figures in your balance sheet, check your current assets and subtract inventories then divided it by current liabilities. What does this indicate? You need to find out if you have loaned far too much money to customers who are slow to pay. If you do not have around $ 1.50 to $ 2.00 in current asses for every $ 1.00 current liabilities, then you can anticipate problems with your cash flow.

To address this problem, make sure to speed up your collection process in order to raise your cash balance.

Accounts Receivable and Accounts Payable

It is important to have a significant difference between your accounts receivable and accounts payable. This is a quick and easy way to determine if your working capital is out of balance.

Consider stretching payments to your suppliers in order to narrow the gap. Ask your Melbourne accountant or Melbourne accounting firm about Natural Payment Terms.

Read part two to gain more insights.

Leave a Reply