Giddh, May 23, 2012

Assisting your business in snowballing revenue

Revenue generation in a business does not only depend on the ability of a business to create and market its products; it also depends on some indispensable internal factors which cannot be overlooked. A major chunk of these internal factors comprises of the accounting activities carried out within the business. If not taken seriously, forget revenue generation, management of basic transactions would be impossible without applying proper accounting practices.

How exactly accounting can assist your business in snowballing revenue?

a. Trend analysis

In order to observe the changes in the business; trend analysis can largely help a business. It takes into account a base year and compares it with the current year to analyze the actual current changes that have taken place in general.

b. Generation of income and expenditure statement

A proper income and expenditure statement helps the business ascertain the total income and expenditure done during a period of time. This analysis helps in making necessary changes in the general income and expenditure and results in controlling unneeded expenditure, if any.

c. Graphical presentation of monthly and yearly accounting activities

With a proper graphical presentation of monthly/ yearly accounting activities, the business can easily comprehend the due modifications that can be done for further improvement. This gives a business concern a good chance to consider where exactly it has made mistakes in the past and how these mistakes can be avoided in present and future as well.

d. Ratio analysis

With the presence of a large number of accounting ratios like turnover ratios, profitability ratios and liquidity ratios a business can very simply make much needed alterations in the transactions that are taking place. For example, with debtors and creditors turnover ratio, the total number of debtors and creditors can be controlled accordingly.

e. Comparative and common size income statements and balance sheet

The best part of putting accounting into practice is that a large number of accounting statements can be analyzed including comparative and common size statements, balance sheet, profit and loss statement, trading account statement, et al. This analysis helps in comparison of present performance with past performance and lets the business improve and advance further in its operations.

Taking into account the above points, it can be directly said that accounting not only controls the business transactions but it also helps in overcoming mistakes, thereby assisting in profit generation.