Financial Reports and Online Business

When you run an online business and process credit card transactions, it’s easy to place a high priority on certain tasks and perhaps neglect others. One task that definitely shouldn’t fall by the wayside is carefully studying ALL financial data. More than cash flow and credit card fees. Tracking financial indicators on a monthly basis allows you to keep your finger on the pulse of your business. Read on to learn which types of financial data can give you the best insight into your company.

Growth

If you’re just getting started out, you might not have a great deal of data about your company’s growth to analyze. However, as time wears on, you’ll be able to gather more and more information.

Growth means that your sales are increasing on a year-over-year basis. When you see a year-over-year decrease in sales, your business is shrinking.

Activity Ratios

The term “activity ratios” refers to how effective a company is at generating cash from its assets. Simply put, does a firm use its assets (which are resources a company owns and controls in order to derive benefit) efficiently?

Here’s an example of an activity ratio: the average total of your equipment is $20,000, and you made $100,000 last year. One hundred thousand divided by 20,000 is five, so you turned over your assets five times last year. Although you might be satisfied with that number, you have to look at the competition. If your competitors were able to turn over their assets six times last year, you need to be more efficient.

Liquidity

Accountants determine how easily a company can meet its financial obligations with their assets that can be quickly sold without greatly affecting their price. The ability to easily fulfill those obligations is known as “high liquidity.”

The ability to pay off debts or pay dividends to shareholders is critical. If you can’t do that, your business won’t survive very long.

Profitability

Profitability is one of the most important measures of corporate success. You can measure profitability by determining your income and your expenses. If you generate more income than you spend on expenses, you’re making money.

If your business is not profitable, it will not survive. Conversely, if your firm is highly profitable, you’ll earn back the cash you invested in the venture.

MBankcard Payment Processors: Helping You Achieve Business Success

Do you want to improve your liquidity and profitability? Accepting credit cards is one way to accomplish both of those goals, and MBankcard can help you do that. Credit cards are a convenient and easy way to pay, which attracts customers. Our technology enables businesses to accept all credit cards for payment. The setup is fast – you can accept credit card payments within a day. Our rates are low, and there are no hidden fees, so you can pass those savings along to your customers. When your customers complete a transaction on your site, they stay on your site – they’re not transferred to a third party. Call us today at Contact Us to learn more.