As part of our Five Point Profitability Checkup, we review the following items on a regular basis to help you make more money:
1. Taxable Income Analysis
The first part of the profitability checkup is a review of year to date taxable income. We then compare taxable income to projections and determine your estimated tax payments for the remainder of the year. In addition, we will recommend adjustments to upcoming tax payments.
Another major component of the taxable income analysis is a review of any unutilized strategies to reduce your tax liability. There are many possibilities in the area of fringe benefits, retirement plans, various tax credit programs, entity choice, and many more. At various stages in the life of your business some or all of the different tools may be needed. We help you navigate safely through the tax code so you pay no more tax than you should.
2. Balance Sheet Strength Analysis ( Stress Test)
Once we have your company’s tax issues addressed, our focus turns to the viability of your company. We review your balance sheet and look for weak spots that could jeopardize the businesses ability to survive downturns. The balance sheet strength analysis looks at items such as cash reserves, debt, accounts receivable, equity structure, and more. We will help you form the financial foundation your company needs to outlast your competition during difficult times.
3. Gross Profit Margin Analysis
A review of your gross profit margin is one of the simplest yet commonly overlooked metrics of the strength of your competitive advantage and of your marketplace. If an upward or downward trend in profit margins develops it will require further analysis as there are many possible reasons. Sometimes macroeconomics factors are the cause but other times changes in profit margins may indicate problems with pricing or delivering your product. Our experienced consultants deal with many companies on a regular basis as well as staying abreast of events effecting the overall economy that could impact your earnings.
4. Overhead Expense Analysis
Sometimes businesses that are strong in most areas can generate substandard profits due to wasteful spending on overhead items. The overhead expense analysis reviews overhead expense compared to budgeted amounts as well as what the business spent in prior periods. Often this review yields savings as we help you find ways to trim costs or organize things more efficiently.
5. Breakeven Sales Analysis
Sometimes businesses struggle to reach profitability. If we notice prolonged periods of no profits, we perform a breakeven sales analysis. This analysis helps you determine the amount of product or service you need to sell to attain breakeven. The calculation uses your current profit margin and your actual overhead expenses is not a theoretical amount but a real figure you can use to decide if changes need to be made to your business model.