Black Friday Sale! Wow, some stores are even opening Thursday evening. But how did the term come to be? “Black Friday“ refers to the day after Thanksgiving and is purported to be the day many retailers transition from having a loss to a profit for the year, from the red to the black. We all want to operate in the black! After all, we are all in business to make money in our way and in our space. The report we rely upon to measure that is the income statement and in general, it reports revenues, cost of goods sold, and expenses to arrive at the “bottom line,” preferably a profit, or net income.
Years ago, we called this report a “Profit and Loss Statement.” That is still the title it holds within the standard QuickBooks report listing. This report is useful for both management and outside users such as lenders. The focus for each group differs some, but both types of users want accurate reports on which to base decisions.
Accuracy includes proper and consistent recording of information and relevant account usage. Your accounts should be set up to provide meaningful information to manage the business operations and ease compliance reporting issues. To that end, knowing what the key areas of financial success for a motorcoach company is critical. Segregating key costs into their own accounts for evaluating and monitoring can be the difference between understanding why you are or are not achieving your financial goals.
Take a good look at your income statement.
- Does it give you the information necessary to evaluate and monitor key areas of revenue and/or expenses?
- Is it designed to give you sufficient detail?
- Can you easily determine if your fuel and maintenance costs are within reason?
- How about driver wages?
- Sales wages?
- How about your revenues? Are they growing each year? Shrinking?
- Is your customer base changing?
How your accounts are set up can go a long way in helping you evaluate these and other questions. A CPA who understands your business can help you design a chart of accounts and report format that makes these questions easier and quicker to answer.
Various users of the income statement will want to see different levels of detailed information. Managers will generally need more detail to evaluate and monitor operations to help guide the company to the owner’s financial goals. Lenders and governmental agencies look at a more macro scale. Lenders look for key indicators for future cash flows to support new lending activity. BUSBooks can help provide the information in either format to make each user’s evaluation more efficient.
Preparation of financial reports, and their interpretation, can help guide your business into the black far before the last Friday of November. Contact BUSBooks today.
My next Nerd News will discuss Cash – Do you know where it comes from? Do you know where it goes?
Written by Tracy Fickett, CPA and Peter Shelbo, Veteran Bus Operator
BUSBooks is a unique CPA accounting firm dedicated to the motorcoach industry.