How to Read Your Financial Statements (Without a Finance Degree)
If you’ve ever opened your Profit & Loss statement or balance sheet and felt your eyes glaze over—you’re not alone.
Most small business owners didn’t start their business to become accountants. But understanding your financials, even at a basic level, is one of the most powerful tools you have for making smarter decisions and increasing profitability.
At A&L Bookkeeping, we make financial reports make sense—so here’s a quick breakdown of what you’re looking at and how to use it.
In the video below we take a quick walk through some reports from a landscaping company to show you what this should look like and what it means.
📄 The Profit & Loss Statement (P&L)
This report shows how much money came in and how much went out over a specific period.
What to look for:
Top Line (Revenue): Total income from sales or services
Cost of Goods Sold (COGS): What it cost you to deliver that service or product
Gross Profit: Revenue minus COGS (this shows what’s left before overhead)
Expenses: Rent, payroll, software, fuel, etc.
Net Profit (Bottom Line): What’s left after everything is paid
Why it matters:
Your P&L gives you a snapshot of performance—are you actually making money? It helps you see trends, set goals, and know when it’s time to raise prices, cut costs, or invest in growth.
📊 The Balance Sheet
This report is a snapshot of your business’s financial health at a specific moment in time.
Key parts to know:
Assets: What your business owns (cash, equipment, receivables)
Liabilities: What your business owes (credit cards, loans, unpaid bills)
Equity: The value of the business (Assets - Liabilities = Equity)
Why it matters:
It helps you track debt, savings, and long-term financial strength. Lenders, investors, and even your own peace of mind rely on having a strong, accurate balance sheet.
💡 Pro Tip: Don’t Just Glance—Use It
Looking at your financials monthly (or quarterly at a minimum) can reveal:
Where your money is really going
Whether your business is growing or shrinking
Which areas are most profitable
If you have the cash to hire, expand, or invest
And if you’re working with A&L, you don’t have to go it alone—we’re here to walk you through your numbers, explain what they mean, and help you use them to make smart decisions.
📞 Want help reading your financials?
We’d love to sit down and walk you through it—no jargon, no judgment. Just clear numbers and smart guidance.
Schedule a consultation and take the guesswork out of your growth.