If I’m profitable, where did my cash go?

This time of year small business owners who only infrequently take a glance at their financial statements may be getting a full year P&L delivered by their bookkeepers. If you put an ear to the wind, you can almost hear the moaning – “If I have this much profit, how come I don’t have any money in the bank?”

Assuming the profit is calculated properly, there are, of course, only three possible answers to this complaint. Understanding how financial statements work, may not make the answer a...

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