Friday, February 4, 2011

The Value of a Good Accounting System

Why do you need a good Accounting System?
  1. Accounting is the fundamental component of a business
  2. Accurate and timely information about business performance is critical to making decisions and obtaining financing
  3. Will assist in avoiding business failure
  4. Can help reduce legal and financial costs

The Value of an Accounting System
  1. What is selling the most
  2. Are the right products selling
  3. Who is buying
  4. Is the list of customers increasing or decreasing
  5. What amount of repeat business exist
  6. What is the average sale
  7. Who is selling the most
  8. What is the profit margin
  9. Is the company making money
  10. What is the debt to asset or equity ratio
  11. How is actual performance compared to budget
  12. What is the return on investment and capital
  13. How effective is the advertising
  14. Can specific channels be identified
  15. Would borrowing money be smart for expanding the business
  16. How fast is the company growing
  17. Does it make sense to invest in new equipment
  18. We is it reasonable to hire a new employee
  19. Can I afford to make an acquisition or should I sell the business

Useful Metrics
  1. Gross Revenue - Broken down by services
  2. Number of clients serviced
  3. Types of clients served - Diversity in client mix
  4. Expenses/Overhead
  5. Expense per client
  6. Net income - Net income per client
  7. How long has the business existed
  8. staff to client ratio
  9. Market segmentation

No comments:

Post a Comment