Class 111 - This week we looked at the "Big Three" - The balance sheet, income & expense statement, and the cash flow statements. These reports are used for financial reporting different from the management reporting from last week. We compared how the three interrelated and how they work together to provide a picture of the health of a business.
The balance sheet is a snapshot in time. Assets = Liabilities + Owner's Equity
The income statement reflects revenues less expenses to show whether the company has made a profit or loss.
The cash flow statement takes out depreciation and other non-cash items and provides information as to the viability of your cash. It incorporates three catagories; operating, finance and investing.
Both the income statement and cash flow statement shows activity over a period of time; a quarter or year.
It came to my attention this week that very few students have any experience or understanding of financial statements. Therefore "even teams", the topic this week is to discuss specfically what other resources you will access to help you have a better understanding of preparing and interpreting financial statements.
Have a good week. Alexis
Group 20 - Taylor Mortlock, Jon Blaha, Cole Segerstrom, Duane Olson, Alex Phillips
ReplyDeleteWe spent some time researching on the internet to determine whether there are useful tools available to help with the interpretation and preparation of financial statement. For a basic guide to preparing financial statements, we found www.business.com to be a useful resource. However, entrepreneurs.about.com had a much more detailed guide to the interpretation of financial statement, and in showing how to interpret them, it also provided a guide to preparing the three most common financial statements. As was discussed in class those are the balance sheet, income and expense statement, and the cash flow statement. What was useful is that the website broke down each statement into much more detail of what could be included under the umbrella of the statement. For example for the balance sheet, it provides numerous useful ratios that can be calculated, how to calculate each, and how the ratio is useful for further interpretation of a statement. This allows one to dive deeper into the financial statement and gain additional information beyond understanding only the basics of each individual statement.
Group 8: Morgan Pattison, Peter Gianforte, Natalie Gianforte, James Cain, James Ide
ReplyDeleteWhen we were researching the “big 3” that make up a financial statement (the balance sheet, income and expense statement, and cash flow statements) we came across the following resources not only in understanding each section of the financial statement but also in preparing them. The first resource we found was this, http://www.sec.gov/investor/pubs/begfinstmtguide.htm. This particular resource was developed by the U.S Securities and Exchange Commission and is labeled the “Beginners Guide to Financial Statements”. This particular resource breaks down each section of the financial statement and puts in layman’s terms what is included in each section, the formulas in each section etc. This particular resource is great in providing the reader with the information in order to understand and interpret financial statements however provides little information in preparing financial statements.
In order to prepare financial statements our group was able to locate the following useful information. The first resource we came across was templates that are already provided for users of Microsoft Office. These templates make easy the entering of information and already provide the formulas so that easy and efficient calculation of financial statements is possible. Microsoft office templates were created to comply with industry standards when it comes to the preparation of financial statements. We also were able to locate a website that provides free excel spreadsheets that easily allow a small business owner in developing their financial statements http://www.exinfm.com/free_spreadsheets.html. We as a group decided that Microsoft office would be a much more reliable resource however feel that these could provide useful in certain situations. As a group we decided that it is paramount to have a firm personal understanding of the financial stability of your company which the financial statement provides, because of this we will all personally track this information. We also understand that our minds and commitments will at times be in other places, so along with tracking this information on our own we will also employ an accountant at least once a year so that we can compare data with a person with much greater knowledge on the subject.
Group 14 - Naa Ashietey, Melissa Birdsell, Lynn Leyder, Katie Lipp, Elizabeth Freeman.
ReplyDeleteTo understand financial statements, we thought it would be a good idea to ask field doctors or our preceptors what kinds of templates they use and how they have modified them to suit the purposes of running a chiropractic clinic. Most of us also have family and friends who may be in the accounting business so it might not be a bad idea to ask them to help us understand the components of the financial statements better. We also did some research on the internet and found that the websites listed above by Group 20 were very informational. It gave in depth detail on the different parts of the income statements, cash flow statements and balance sheets. In addition to those websites, we also found that http://www.ehow.com/how_2081262_create-financial-report.html gave a good simple 7 step instruction on how to categorize all expenditure and revenue for the financial statement. It also gave instructions on how to create templates for the income statement, cash flow statement and balance sheets. Another informational website was www.yourbusinesspal.com, it provided the sub-categories for all three components which should be included in the statements. For in stance, the income statements should include revenue, expense and net income. It provides the sections for the other 2 components of the financial statement as well. It provides examples of templates which can be modified for our practical use as well. The author also states that the financial statement is important because it is an essential part of the business plan especially if it is being prepared for a lender. It is very necessary for all 3 individual components to come add up to form a complete financial statement.
Group 10-Brandon, Ashley, Samantha, Bridget, and Melody
ReplyDeleteGroups 14 and 20 provided some great information and resources to prepare and interpret financial statements. We also thought to use the internet and practicing chiropractors in broadening our understanding of utilizing financial statements. We found http://www.toolkit.com/small_business_guide/sbg.aspx?nid=P06_1570 which is a Business Owner's Toolkit online that provides templates for cash flow statements, balance sheets and income statements. It has a free membership that is required to download these templates, but then you are able to access the templates that will help a small business owner prepare a financial statement. The website also explains the purpose of each of the components. In terms of interpreting a financial statement, we found that the entrepreneurs.about.com website that group 20 referenced had the most useful information by breaking down each component. It goes into the different ratios you can use from the information gathered on a balance sheet to determine a company's financial performance and how this performance has changed. The website also discusses how the income statement can be used to determine the efficiency of a company. Finally, the cash flow statement was discussed to show how you can tell if a company is considered to be of "good value." We decided that the internet was the best way to get a better understanding of the basics of preparing and interpreting financial statements, while talking with field doctors helped us get a better grasp of how to apply the financial statement in a chiropractic setting. It allowed us to understand what specific items need to be included for a chiropractic business owner. We observed that many of the chiropractors that we talked to had an accountant help them with their financial statements. Through this assignment, we realized the importance of knowing how to prepare and interpret a financial statement even if we decide to hire an accountant to handle our finances.
Group #32- Erich, Khai and Nate
ReplyDeleteWe also spoke with our preceptors as well because we thought it would be beneficial to get advice from experienced doctors in the field, the consensus was to speak with a professional accountant. It is important that you prepare a draft of a financial statement to have them review for you. We did some research on the internet to find a good place to start; www.allbusiness.com has step by step instructions where to start breaking down each important portion of the statement. There are also included links to other resources important to small business finance.
We also found www.ehow.com that step by step instructs you how to prepare your own financial statement using your own computer and a simple spreadsheet program such as “Excel” to calculate your company’s financial worth. In conclusion after preparing your financial statement it is advisable to have it reviewed by an accountant.
Group 30--Thad, Sampson, Brett and Andy
ReplyDeleteWe spoke will preceptors and field doctors to find what was the best resource for understanding financial statements. The best route will be to contact an accoutant and get to know them, to at least educate us on financial statements. If it is not your nature to understand that kind of stuff, there's no sense in making it up as you go. Someone who is well qualified to handle money, which at this point is an important asset to you, would be the best way to go. No sense in trying to figure it out yourself and messing it up. Otherwise...google it.
In thinking of how to better understand what it is to prepare and interpret financial statements we decided an internet search would be a viable option to give us a wide variety of options. In first entering 'preparing financial statements' there is a large amount of options. The first site visited was www.netmba.com. This site gave an accurate account of what financial statements offer in a successful business practice. This site presented a commonsense order of preparing a financial statement. It emphasized: income statement, statement of retained earnings, balance sheet and cash flow statement. Another search turned up an actual layout or 'exhibit' of a financial statement allowing the individual to visualize and intrepret what an organized financial statement would look like. This can be found at www.highered.mcgraw-hill.com. Another site that is quite helpful in interpreting financial statements and understanding how each section of a financial statement is beneficial in its use is www.articlesbase.com/online-business-articles/financial-statements-and-how-to-interpret-them-611961.html. Overall the best thing to do is get a good idea of what a financial statement is and how it fits into the big picture of your business and then to consult an accountant to hone your business practice and princibles.
ReplyDeleteGroup 26 Scott, Alex, Brett, Dana and Jacob.
Firstly, the best resource, as was noted by a few of the previous groups, would be to access an accountant. An accountant invested in the community that one plans to practice in would be a great person to utilize, as they will have direct ties to local businesses and banks. They deal with numbers, money, and the specifics regarding the preparation and interpretation of financial statements on a daily basis and will gladly advise and invest themselves in a doctor of chiropractic that is planning on opening within their own community. It would also be wise to utilize a DC that has been in practice for a while. They are sure to pass along the necessary info on understanding financial statements, as well as any templates that they may use in practice. They are also likely to pass on any of the mistakes that they may have made starting into practice, so that we can avoid those same mistakes. Of course, another resource that would be utilized are the sites on the internet that direct one on the preparation of financial statements. This would most likely be the first stop in understanding financial statements, as one would want a basic understanding of the balance sheet, income & expense statement, and the cash flow statements so that they can prepare a working draft to bring with them to the accountant for further review and understanding.
ReplyDeleteGroup 4: Beau Banton, Mary Klimek, Sarah Zindt, Tara Keie, Megan Hall
Firstly, the best resource, as was noted by a few of the previous groups, would be to access an accountant. An accountant invested in the community that one plans to practice in would be a great person to utilize, as they will have direct ties to local businesses and banks. They deal with numbers, money, and the specifics regarding the preparation and interpretation of financial statements on a daily basis and will gladly advise and invest themselves in a doctor of chiropractic that is planning on opening within their own community. It would also be wise to utilize a DC that has been in practice for a while. They are sure to pass along the necessary info on understanding financial statements, as well as any templates that they may use in practice. They are also likely to pass on any of the mistakes that they may have made starting into practice, so that we can avoid those same mistakes. Of course, another resource that would be utilized are the sites on the internet that direct one on the preparation of financial statements. This would most likely be the first stop in understanding financial statements, as one would want a basic understanding of the balance sheet, income & expense statement, and the cash flow statements so that they can prepare a working draft to bring with them to the accountant for further review and understanding.
ReplyDeleteGroup 4: Beau Banton, Mary Klimek, Sarah Zindt, Tara Keie, Megan Hall
Group 24- Nate, Joe, Dustin, Justin and Craig
ReplyDeleteOur group decided that the best resource to help us understand the Big 3 statements would be by consulting with our accountant who will also deal with our company's taxes. A few of our group members have family members and/or who are CPA's and we all agreed that it would be beneficial to personally sit down with these people and discuss how these financial statements apply to our clinic before the grand opening. Also, some group members actually have experience with entrepreneurial finance taught by John Rabine in a class at Palmer. He is a very reliable source with whom is willing and able to help students associated with Palmer and who he has previously taught. Also, there are several resources online to help understand these financial documents. One website we found was www.investopedia.com which goes through and explains all of the statements in depth. Also, there are financial textbooks available in Palmer's Library as well as in St. Ambrose's Library which could help us understand these documents.
Group 22- Emily, Dani, Bailey, Pat and Matt
ReplyDeleteWe thought of many things already listed above by the other groups such as utilizing the internet and the doctors that we are precepting with. First we simply Googled “understanding financial statements” and a whole host of sites came up. One in particular that was helpful was a site called bizzer.com. This site was easy to use and had great information, but what was especially nice was the fact that there were also exercises given to test you to make sure you are doing it correctly. At the end there is even a practice exam which when taken is also helpful. Also actually doing them yourself on programs such as excel aids in the understanding of such topics, but should be reviewed by a specialist in this field. Obviously asking someone who has already done countless amounts of financial statements like field doctors is helpful because it is a person, therefore questions can always be answered in real time and thus understanding of the material is gained. Another resource that we also thought to utilize was simply a financial advisor and even an accountant. Yes, there may be a cost involved, but the benefits of doing so greatly outweigh the drawbacks to having to pay for such information. Understanding how to do financial statements and apply them to your business is key to any business owner regardless if you are the on that is handling the finances of the office. This is because keeping good stat records is a major way of knowing how your business is doing and where the money is going. The listed above are ways that we thought would enhance any business owners knowledge on the subject especially if that owner is a beginner to the subject.
Group #16
ReplyDeleteWe also thought it would be a good idea to consult with friends that we knew in the accounting business. They could consult with us to educate us on financial statements; they could also help us to tailor-make our templates to fit our business as Chiropractors. Also, as we look to where we are heading in the near future we thought it would be wise to start looking for accountants to hire to help us in the beginning stages of running our business. Another option we can use is asking our friends that have graduated what they used to help them to understand financial statements. We also used the internet to do research and we found a great site that really broke it down into the basics and was very informative. http://www.sec.gov/investor/pubs/begfinstmtguide.htm. The site gave a basic understanding of how to read financial statements. We also found the previous sites mentioned by groups 20 and 14 to be very helpful as well.
Group 28: Holly, Brittany, Chad, Mark
ReplyDeleteWe also had little understanding of financial statements and looked to the internet for further information. A search for "understanding financial statements" revealed a number of helpful websites. We came across the US securities and exchange commission website which offered an excellent beginners guide to financial statements. In addition, there were many google results offering similar types of articles.
We also agree with other posters that an accountant would be the best person to obtain information from. While it is prudent to learn all you can about business finance, there is no better substitute than to utilize a professional trained on the topic. In the future, consulting a professional may not be necessary, however, with little education or experience on the topic we all felt that a consultation with an accountant would prove to be the best source of information.
Group 4: Andrew, Jason, Jennifer, Tara Jo, Amy
ReplyDeleteWe would, like so many of our colleagues, consult with an accountant. The "financial world" is constantly changing and it would be in our best interest to have someone who is knowledgeable about the necessary financial statements for our business. And while we would employ an accountant, we will still keep track of our financial statements to ensure reliablity. There are many different websites out there, but in an effort to "build our own personal library", we like the book "Financial Statements" by Tom Ittelson. Above all else, though, we would consult first with a reliable CPA.
Group 16: Kevin, Stephanie, Heather, Ashlee, Ashlee
ReplyDeleteOur group decided that we would consult with an account as well as a financial advisor. There are also numerous resources on the internet. To be safe however, a professional in this area would be better until we are more confidant tackling the area ourselves.
We feel that consulting with a professional will keep our systems up to date, as well as ensure that our records are complete and correct according to laws and regulations.
Group 12-josh,kyle,matt,matthew
ReplyDeleteOur group thought that when trying to find information the best thing to start doing is using the internet, it can provide you with a lot of information that you are seeking for. The only problem is about the internet that there can be false information out there and you could potentially find the false information and be mislead.
The best way to go is to consult your accountant and financial advisor they can provide you with the information that you request and you know that it is accurate.
Group 10: Brandon, Bridget, Ashley, Samantha, Melody
ReplyDeleteOur group decided that we would consult with an accountant, SCORE counselors, and in my case the Michigan Small Business Development Counselors. They all provide valuable information in keeping us on the right track.
Group 6
ReplyDeleteWe will be using Quickbooks as well as consulting with an accountant. Quick books generates reports that can be used to assess the financial position of your business. While it is not great at showing you what it is doing to calculate the numbers is generates, it is very user friendly particularly for those that are not familiar with financial statements. I have found that most accountants are set up to take your Quick book files and prepare taxes from them. I have also consulted my accountant when I need clarification on financial statements or even about how certain decisions may affect the business, tax ramifications etc. This has been the most effective route I have found.
In the previous post, I meant to log us in as Team #2...not Team #4. Sorry for the error.
ReplyDelete