3 Tools for Effective Monitoring of Financial Performance
It is of utmost importance that from time to time, we observe, monitor or evaluate our financial performancs in whatever business we are into. This is applicable to both individuals and firms. It is not good to just assume that you are only always in profits or gains; and even if you are always in profits, it is still necessary to always check and ascertain whether your profit level is growing or stagnant.
Monitoring your financial performancs helps you to grow. Relating to blogging on LEOFINANCE or HIVE, it is imperative that we monitor our LEO or HIVE earnings either monthly, weekly or daily. It helps one to grow and not be stagnant. It is only when you monitor you carefully monitor your cashflows that you will be able to grow your earnings. For a firm, measuring financial performance can be tasking but there are a few financial statements that could help enhance the process of financial management.
The financial statements of a firm can be said to be the end result of transactions recording, classifying and summarizing for a given period of consideration. There are 3 basic types of financial statements that I will consider in this post.
First is the Income Statement. This statement is a major device or tool for measuring a firm's financial performance over a given period. The income covers a defined period of time which could be one month, four months or a year as the case may be. More so, it is usually be presented in a progressive order so as to be able to examine profit and loss after each type of expense has been deducted from sales.
As a cryptocurrency trader too, it is necessary to carefully draft your income statement that is, mapping out all your buys and sales including both volumes and prices. It's easier to monitor your trading that way and know whether you are making gains or not.
Second is the Balance Sheet. The balance sheet is a financial statement that shows the financial position of the firm at a given point in time. It does not purport to represent the result of transactions for a specific month, quarter or year but is a cumulative chronicle of all transactions that have affected the firm since its inception.
In a standard balance sheet, the first section usually carries the firm's assets. Now, assets are the economic valuables of the resources a firm owns or cannus in its operations. They may include cash, marketable securities, accounts receivable, inventory, fixed assets and others. Consequently, the second section usually contains the liabilities of the firm like debts to be paid, shareholders equity, current payables etc.
Lastly, the Statement of Cash Flows. Cash flow general represents cash or cash equivalent items that can easily be converted into cash within a short period of time. This statement is important and helpful in monitoring financial performance because it emphasizes the critical nature of cash flow to the operations of the firm.
Finance is all about accountability. So, if you wish to monitor your financial performances well and also be accountable, then pay attention to the use of this tools. I hope you found this useful.
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