Do Your Business Financial Statements Tell a Compelling Story? 

By Randy Kroll, Partner

A business owner and I were talking recently and I asked him how much time he spends with his company’s monthly financial statements. The answer was not much; he looks at only two numbers, the cash balance and the net income.

He’s not alone. There can be a tendency for business owners to do a quick scan and then to jump to cash and net income because either everything else in the financial statement is, well, boringly routine or the statements are not designed to tell a story. And this can cause major headaches down the road. In fact, those of us at Platinum Group who work on turnarounds have found over the years a direct correlation between the quality of a company’s financial reports and its strength as an ongoing concern. And with quality I mean compelling.

Those businesses that have not honed their financial statements to tell a compelling story tend to use them as a snapshot—shall we say a black and white photo. Nice to have and insert in one’s accounting photo album, but lacking in color and therefore, unlikely to attract attention or have a lasting effect.