Sept. 5, 2018
With Michael Kling, OD
CEO & Founder, Impact Leadership
This is the fourth in a six-part ROB podcast series, “Manage Your Practice Like a Professional.”
Three essential financial statements must be tracked and analyzed in order to make informed, data-based decisions to manage an optometric practice and keep you on track with your growth goals. Statements can be generated from financial software you may have in place, and this automates the process and accelerates your management abilities. Together, these three statements provide a portrait of the financial wellness of your practice and are critical in practice valuation and investment financing.
ESSENTIAL FINANCIAL STATEMENTS
Income Statement (aka P&L) is a barometer of practice performance, measuring revenues and expenses, which compute to gross profit and net operating income. You want to know these performance metrics, and so does your lending institution. Run this statement frequently, to see how you are doing month-to-month and year-to-year. This statement also is used in determining your tax liability.
DOWNLOAD: This can be generated from your accounting program, such as QuickBooks:
Balance Sheet is a “snapshot in time” measuring your current assets and liabilities. It is called a balance sheet because assets must equal liabilities plus equity. A lender will need to see this statement before approving financing.
DOWNLOAD: Free templates are found online.
Here is one: https://formswift.com/sem/static-non-state/balance-sheet?
Statement of Cash Flows measures cash coming in vs. cash leaving your practice. This shows at a glance if you have a positive or negative cash position. There are three sources of cash flow: operations (day to day), investing (long-term assets) and financing (dividends to owner or debt service to lender).
DOWNLOAD: Free templates are found online. Here is one:
OTHER PODCASTS IN “MANAGE YOUR PRACTICE LIKE A PROFESSIONAL”