Financial Reports for Business Owners
Written by Logan Smith, 2026 Marshall Jones Accounting Intern
At the end of every month, the owner of any business should review the financial
statements to have a better understanding of the state of the business. The question many
business owners may find themselves facing is which statements are worth their time to look at
and which ones aren’t. With that in mind, here are my recommendations for what every
business owner should review monthly.
Balance Sheet by Month
A balance sheet contains essential information for an accountant to determine the health
of a business, but business owners should know how to read one too. It contains information
about your assets (what you own), liabilities (what you owe), and equity (your stake in the
business). A balance sheet comparison by month is great for looking at how your assets have
changed over time. The balance sheet is one of the most informative financial statements
available to you if you know how to utilize it.
For example, a comparative balance sheet by month can show you how your cash on hand
has fluctuated month to month, debts, depreciation of longer standing assets, and the state of
any other savings or brokerage accounts. It contains the accounts to calculate certain ratios that
can give you information like how easily you can pay off your current debts or profitability ratios.
Profit and Loss by Month
The P&L by Month is an amazing tool that can give you insights into existing trends and
patterns. It breaks down your revenues and expenses, separating them into their respective
months, and giving you a clear picture of how much and where you made or spent your money.
It’s also indispensable to help plan using trends to forecast for upcoming months.
The P&L by month can reveal busy or slow months throughout the year. This can be
achieved by reviewing the P&L by month for multiple years looking for trends. For example,
construction can tend to have slow months during cold months and be busier during warmer
months. Trends like this can be found by analyzing a P&L by month and this is why it is so
efficient and effective for planning for the future.
Profit and Loss by Year
The P&L by year is great for seeing progress over time, be it between last year and this
year or over a span of five years. It is specifically good for looking at long-term growth as
opposed to the short term-trends revealed by the P&L by month. The more years you can look
at, the more effective it will be at helping identify areas of growth and the more easily you can
plan around them.
This could be broken down into which departments or service lines of a business have
grown the most, are the most profitable, etc. You can then use this information to plan around
the strong points and the weak points as a business change over time.
Profit and Loss as a Percentage of Income
The P&L as a percentage of income is exactly what it sounds like. It shows what
percentage of your total revenue goes to different expenses. It is also an even better planning
tool for the upcoming months for the simple fact that it shows even more clearly where your
money is coming from and going. This means you can more easily adjust to where you want to
see money come from or go.
One of the many ways you can utilize this is by seeing where your heaviest or lightest
expenses are and act accordingly. It also gives you a very clear idea of how much you’re keeping
of what you make. As one of my professors drilled into our heads, it doesn’t matter what you
make, it only matters what you keep.
Accounts Receivable/Payable Aging Summary
The AR aging summary is a very popular report, and there’s a reason for that. It breaks
down who has outstanding invoices into different age categories, traditionally in 30-day intervals
(IE 0-30, 31-60, etc.) This is great for keeping track of who owes you and for tracking potential
bad debts that need to be addressed. Inversely, an AP aging summary is great for keeping track
of who you owe and how long your bill has been outstanding. It’s also particularly good for
taking advantage of AP discounts, such as “10/10, n/30”, a 10% discount if you pay within 10
days on a bill due in 30 days.
It is absolutely essential for every business owner to review financial statements every
month, and those are my recommendations. If you utilize all those reports, you should be able
to get a complete picture of the state and health of the business. Contact Marshall Jones for financial statement support.
