Preparing for Lift Off - Understanding your Income Ratios

Income ratios provide a key insight to your business and offer a comparison to others in the same line of business. Ratios can reveal inconsistencies and efficiencies which then allows you to work on specific areas of your business to produce the maximum return for your efforts. Having relevant and timely income ratios will be the result of producing regular and accurate financial reports–Profit and Loss, Balance Sheet and Cash flow. The key is to have the information contained in these reports kept up to date and relevant so you can, at any time, spot any valiance in your ratios and act quickly to either correct or profit from the changes in your business. At the end of the day, Ratios are a tool for understanding your business. And without using these tools, you may as well be flying blind.