How To Read Your Financial Statements?
This is a very “Chim” question to many business owners, but it’s a “common cents” question to us CFOs…
In short, we CFO would zoom in to look at :
1. Net Cash generated for the Month
2. Revenue earned and Order Backlogs still Unfulfilled
3. Any change in Fixed Costs and Breakeven point
4. Working Capital Changes
5. Net Asset Value ( NAV )
6. Gearing
Net Cash generated would gauge success of your business management ability.
Revenue earned and Order Backlogs would gauge comfort level in your sales and operation teams.
Movement in Fixed Costs and Breakeven would gauge if you are out of your comfort zone.
Working Capital Changes would show seriousness in your management in managing your working capital, and not just playing lip service.
Net Asset Value ( NAV ) would gauge if any new value added to Shareholders Value after 1 month of operation.
Gearing would gauge longer term solvency of your business, i.e. Sustainability of your cash flow beyond 12 months.
Hope this helps.
Good Luck!
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