We are often asked which are the most important numbers to focus on in the financial statements.
So, we’ve put together a list of the Top 5 Numbers to check regularly in your financials.
In our opinion, even though your financial statements are full of numbers, there are FIVE super important ones which you need to check on a regular basis. This will ensure your business is on track and profitable. If these numbers are off a bit, or outside expectations, by checking them regularly, you have time to put in place the necessary adjustments to get them back on track.
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. Important to track this over time and definitely compare 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.
Peter