Financial Statements & Audits

Litman, Gerson, LLP provides its clients with comprehensive financial advisory services. We will work with our for-profit clients to perform company-wide audits, reviews or compilations, and 401(k) audits. We also prepare financial statements for our not-for-profit clients.

We can prepare or supervise the preparation of your financial statements and, more importantly, we can help you to use these statements and other financial reports, to better manage your business and increase your profitability.

Good financial records are necessary for several reasons:

Prepare financial reports monthly. For year-to-date comparisons and to make quick management decisions, financial reports must be done monthly. "As goes the month, so goes the year." You can compare the sales, gross profit, and net profit at, say, the end of May, with prior years and get a good idea of how the current year will finish. You can compare the total accounts receivable or payables with prior years to spot problems and then quickly take corrective action.

Here are some common business ratios you should monitor on a month-by-month and a year-by-year basis:

	Current ratio - Current assets divided by current liabilities will measure your ability to pay your current debts.
	Debt to equity ratio - Total liabilities divided by net worth will provide you with a year-to-year comparison of your ownership in the company.
	Receivables outstanding - Receivables divided by average day's sales will give you the number of days' sales on the books.
	Profit margin - Gross profit divided by net sales will allow you to compare your business operations to other companies in your industry, as well as monitor your own operations over time.

Understanding financial statements can increase business profits. If you would like to learn more about using financial statements to make sound business decisions, we would be happy to assist you. No one was born understanding financial information, but it is easier to learn than most people think.

Please ask as many questions as you like; we will help you until you are comfortable with business numbers and can use yours to increase your profitability.