Tag Archives | Financial statements

Reporting Restricted Cash

Your company’s financial statements should be transparent about any restrictions on cash. Are your reporting practices in compliance with the current accounting guidance? The Basics Restricted cash is a separate category of “cash and cash equivalents” that isn’t available for general business operations or investments. There are many types of restricted cash. For example, companies […]

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Why Normalizing Adjustments are Essential to Benchmarking

Financial statements aren’t particularly meaningful without a relevant basis of comparison. There are two types of “benchmarks” that a company’s financials can be compared to — its own historical performance and the performance of other comparable businesses. Before you conduct a benchmarking study, however, it’s important to make normalizing adjustments to avoid any misleading comparisons. […]

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Going Concern Assessments and COVID-19

The novel coronavirus (COVID-19) pandemic has adversely affected the global economy. Companies of all sizes in all industries are faced with closures of specific locations or complete shutdowns; employee layoffs, furloughs or restrictions on work; liquidity issues; and disruptions to their supply chains and customers. These negative impacts have brought the “going concern” issue to […]

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Adjusting Financial Statements for COVID-19 Tax Relief Measures

The Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law on March 27, 2020, contains several tax-related provisions for businesses hit by the novel coronavirus (COVID-19) crisis. Those provisions will also have an impact on financial reporting. Companies that issue financial statements under U.S. Generally Accepted Accounting Principles (GAAP) are required to follow Accounting […]

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Financial Statements Can Help During COVID-19

The economic fallout from the coronavirus (COVID-19) pandemic has forced business owners to reevaluate their operations and make difficult decisions. One place to look for the information you need to make rational, reasonable moves is your financial statements. Under U.S. Generally Accepted Accounting Principles, these typically comprise a statement of cash flows, a balance sheet […]

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Financial Statements Help Make Informed Business Decisions

There are three types of financial statements under U.S. Generally Accepted Accounting Principles (GAAP). Each one reveals different, but equally important, information about your company’s financial performance. Together, they can be analyzed to help owners, management, lenders and investors make informed business decisions. Profit or Loss (aka Income Statement) The income statement shows revenue and […]

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How to Classify Shareholder Advances to Their Companies

Owners of closely held businesses sometimes need to advance their companies money to bridge a temporary downturn or provide extra cash flow for an expansion, a major expense or other purposes. Should you categorize those advances as bona fide debt, additional paid-in capital or something in between? Under U.S. Generally Accepted Accounting Principles (GAAP), the […]

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Financial Statements Help Value Businesses

Owners of private businesses often wonder: How much is my business interest worth? Financial statements are a logical starting point for answering this question. Here’s an overview of how financial statements can serve as the basis for business valuation under the cost, income and market approaches. Cost approach Because the balance sheet identifies a company’s […]

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