It has been documented in many research studies that most small businesses fail due to poor financial management. We also know that most small businesses fail during their first year of operation. Put those two facts together and we know that most small businesses fail during their first year of operation due to poor financial management. Even if they last beyond the first year, if financial management is not sound, they eventually fail. There are many attributes to good financial management and not all of them can be covered in this blog post. What I am talking about today is the need for financial managers to do a frequent analysis of their financial statements.
A business firm's financial statements - the income statement, balance sheet, and statement of cash flows - can provide so much information to the financial manager. Take a look at the article and you will find techniques of financial statement analysis that might fit with your business firm and help you analyze your financial statements.