The 8 Essentials of Financial Reporting

Dec 17, 2014 11:13:06 AM

Anyone ever tasked with reviewing, analyzing and presenting the findings on balance sheets and profit and loss statements (PnLs) knows how daunting all those numbers can be. At Keller Williams, it is the responsibility of each market center Financial Planning Committee (FPC) to digest these numbers and present them to their Associate Leadership Council (ALC). Although not every company is structured like Keller Williams, every company must prepare and review financial reports.

In the first live Keller Williams University (KWU) streaming class taught by Vice Chairman of the Board Mo Anderson, participants learned how to break down and analyze income statements and balance sheets. Anderson emphasized that while the FPC should cultivate a deeper understanding of their market center’s overall financial situation, the ALC need only be educated on eight key points.

Even for those not on the FPC, understanding the eight essentials of financial reporting will help you better analyze the financial health of your business and make appropriate adjustments as needed to increase profitability. Simplicity is key! Especially when it comes to preparing financial reports for your meetings. Don’t bury your colleagues in a mountain of financial data; elevate the essentials for their attention and consideration.

Eight Essentials on the KW market center balance sheets and PnLs:
  1. Accounts Receivable - This should always be $0. If you have a balance, someone owes you money.
  2. YTD Income Listing – Total of all listings and sales sold. You should strive to make listings 60% of this number. (Need ideas on how to increase your listings? Read more on our blog.)
  3. Company Dollar ($) – This is what you have to pay your bills with. Think of it as the money needed to generate the income.
  4. Grand Total of Operating Expenses – Your total bills. Always look for ways to reduce your operating expenses and drive your profits up.
  5. Total Other Income – Creative ways to generate additional income include rents of extra office space you have or fees collected from vendor sponsored events for your associates.
  6. Total KW Approved Costs – These are expenses you have remaining after you add in the extra earned income

________________________The LINE_________________________

  1. Profit Share
  2. KW Owner Profit

Remember that everything above the line impacts profit!

If reading this article about financials is exciting to you and you are not a member of your market center’s FPC, think about joining the committee! The secret to a successful committee is having members with passion. [Tweet "“Without passion there is no vision!” Mo Anderson"]

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