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Three Things Only a Bookkeeper Can Identify in Your Balance Sheet

balance sheet

Your balance sheet is the face of your company’s financials. If you are someone who never really liked accounting, you may have a hard time understanding what a balance sheet or a company’s financials are telling you. In fact, if you are looking to invest in some company, reading financials is just as crucial and being unable to read between the numbers puts you in a tight spot. If you want value for your money in either case, best is to have accountants bathurst by your side. A bookkeeper who has a dab hand at accounting is your golden goose. Take care of them and they can help you put your money in the right places. However, not every bookkeeper is just as good. We have put together the top three things a great bookkeeper can spot in a messy balance sheet.

Revenue Trends

trend

This seems like a very simple thing because that is what we are after, the profits. But understanding the trends of revenue is something a good bookkeeper should be able to understand. If a company posts low revenues consecutively for years, then a good bookkeeper should be able to tell you that it is definitely not a good investment. No matter how good rest of the financials may seem, a bad flow of revenues sets off a red flag for a pro-bookkeeper. And they will surely tell you about it.

Ratios

A bookkeeper has his arsenal full of ratios that slice through the numbers. Ratios are easy way of interpreting financial statements. They help see through the big fluffy numbers and summarize into bit size interpretations. A bookkeeper is able to calculate ratios and put the summary together to look at the big picture. Understanding the health and prospects of a company is a skill of a bookkeeper.

Cash-flows and Expenses

There is a technique called window dressing that companies often use to “sugar coat” their financials. This makes them appear better than they actually are. For someone who may be looking to invest, this is basically a trap. Having a bookkeeper can help you identify the correct numbers through assessing cashflows and expenses. They are pros at reading financials and understanding where the money going and where is it coming from. By breaking down the cash-flows and expenses, a bookkeeper can tell you better than anyone what’s going on with your potential investment. If you are the owner of a company, they can pin point the issue for you to tend to. You would want to know where the money gets eaten up the most. Or alternatively, why there are not enough revenues being generated despite the inputs.

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