What finance numbers do you need to be aware of in business

Business is all about the numbers. There is certainly room for ideas and passionate positions on where a company should go and which direction but ultimately what your Bookkeepers Hereford based https://office-support.co.uk/bookkeeping will tell you is that the profit and loss report is where you will make your most important decisions.

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Firstly there is the revenue to check. This is the total income that has come into the business. This is just the starting point and is not the final figure. From this the expenses must be deducted. These expenses cover everything from the salaries of the employees, the rent or lease on the building to the sundries budget. It is the management of these expenses that mean the difference between success and failure.

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This success is where the profit margin sits. This is what you are left with when all of the expenses are accounted for and reconciled. Even then you have to reduce the cost of goods sold, or COGs to give it the acronym. This is the real figure of success as it gives you the gross profit. This figure is what you make when all the core activities of your business are taken into account.

This finally gives you the Net profit figure and illustrates the exact amount you have made as it is your profit minus every single cost. Beyond this there are also figures around the money owed into the business outstanding and what the company has yet to pay.

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