Balance Sheet Year-Over-Year Variance Reporting compares a company’s balance sheet data to the same period in the previous year, revealing changes in assets, liabilities, and equity over time.

Primary Implication

Angry creditors emerge when they don’t get paid.  The longer you go between payments, the more aggressive they become.  Changes in your Balance Sheet are how you know if your assets work harder than you do.  If they do, you are likely generating enough cash to repay your creditors.

Use Year-Over-Year Balance Sheet Variance Report to confirm how your business is doing across your top four P&L Statements items, core Balance Sheet, and select financial ratio results to establish where you may intervene to stay current with your creditors while earning your investors a return on their investment.

Overview

Financing is used to acquire assets to generate higher sales and profits.  Outside monies are also used to finance short-term expense items intended to generate higher sales and profits.  Changes in your Financial Statements are how the owners of a business know if their investment is earning them a return or not.

Both investors and creditors want to know how much is being sold and the Net Income on those sales.  Investors want to know if they are earning a Return on Capital Invested or not.  Whereas creditors want to be assured that you will repay the money they loan the business as contracted.

If the business is highly consistent month-to-month, and year-over-year use the Year-Over-Year Balance Sheet variance report to establish how the business is improving over time.  This report is critical if you have used debt to acquire assets and are struggling with cash flow.

Every business that takes on debt to grow has expectations for how the debt financing will help them grow the business with greater cash reserves in the bank. Looking at your P&L Statement and Balance Sheet, year-over-year variance reports, helps you identify what isn’t working before you find yourself with tight cash flow problems that make debt repayment a severe problem.