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Thus, we have collected some worthwhile accounting advice for you to follow. Keep reading to find out more!
Are you looking to expand your business before the year is out? Although the economy has been hit hard by the pandemic, even small businesses can find the silver lining amidst the gloom. Thus, we have collected some worthwhile accounting advice for you to follow. Keep reading to find out more!
Working Capital
First up on our list is working capital. This key performance indicator, or KPI, tracks your liquid assets. These assets, in turn, are often used on short-range financial expenditures. Short-term investments, receivable accounts, and obtainable cash all fall under this category. If you want to know the difference between your assets and liabilities at a glance, then check what your working capital is.
Operating Cash Flow
Operating cash flow measures your income levels. In short, it tells you if you have enough revenue to cover your operating expenses or if you are in need of additional funding. The principle of money-in, money-out is primarily focused on your inventory, your services, your salaries, and your sales.
Current Ratio
Are you curious about what your current ratio is? If that’s the case, you can use it to find out what your company’s short-term liquidity is like based on assets and liabilities. Your current assets are considered to be the marketable securities, inventory, or accounts receivable. Meanwhile, your liabilities take the form of debts and other financial obligations that you would normally expect to see on a balance sheet. Two examples are accounts payable and short-term debts.
Cash Flow Forecasting
Speaking of money-in and money-out, that is the basis of how cash flow forecasting is supposed to work. It is, simply put, a projection of how much money you can expect to make or lose over the next few weeks, months, or years – depending on how far out you want to speculate. If you want your business to grow or begin to scale, then you need to factor this KPI into your preparations to avoid potential insolvency.
Return on Investment
Investments will bring both profits and losses. If you are trying to scale your company up, then a smart ROI is essential. This calculation is based on a percentage that compares the profitability or efficiency of your investments, such as on relevant marketing campaigns.
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Unlike other accounting firms, The Harding Group, located in Annapolis, MD, will never charge you for emails or phone calls and will strive for open communication with our clients. Whether you are interested in business advising, tax preparation, bookkeeping and accounting, payroll services, Training + support for QuickBooks, or retirement planning, we have the expertise and years of experience to help. We serve clients in Annapolis, Anne Arundel County, Baltimore, Severna Park, and Columbia. If you are ready to take the stress out of taxes, contact us online or give us a call at (410) 573-9991 for a free consultation. For more tax tips, follow us on Facebook, Twitter, YouTube, and LinkedIn.