Let's digress this week from our typical tax discussion and discuss some tools commonly employed by business owners for analysis of their financial statements and, thusly; their business. In an earlier week, we explained the importance of financial statement analysis as we must remember the numbers on the financials are not an end in themselves. And, without trend analysis and common size techniques, it is difficult to draw any meaningful conclusions from them.

You are working hard, very hard. In fact, you have never worked so hard in your life. Your employees are also working hard. Therefore, your business must be doing, amazingly well. Right? BUT...your bank account is nearly empty, your desk drawer is full of checks that you can't mail, and your line of credit is maxed. So, what is wrong - where is all the cash going? Often, the mystery may be explained by analyzing your financial statements.