No matter which industry or business one is in, there are
three valuable questions to ask. USM Studios examines them.
Is the business making a profit? The only place to look to
find an answer is on the net income statement. All expenses – direct and
indirect – are on that statement. Bills paid are logged on it and after they
are deducted, the business will know if they are earning a profit or not.
How is the cash flow running? The cash flow statement is
needed to determine this. Customers and clients pay cash. But there are times
when they don’t pay full price or a percentage of the price is deducted from a
third party vendor. In any case, businesses usually pay in cash and it has to
have enough to cover the bills for at least 90 days. The cash flow statement is
an excellent indicator if the business is bringing enough cash in to keep on
moving ahead.
What is the terminal value of the business? This is what
most people start and run their businesses aim for: the day when they can sell
it and make some money from the sale. A balance sheet will keep the owner
up-to-date on the terminal value of their endeavor. It measures the assets,
liabilities and equity of the business owner. USM Studios, Inc. encourages
readers to evaluate these three needed documents every month to be sure nothing
slips through the cracks.
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