Unlocking the power of QuickBooks Online (QBO) for financial analysis can be a game-changer, especially when it comes to assessing your business’s performance. In this guide, we’ll delve into the ease of conducting vertical analysis on the Profit and Loss statement (P&L) using QuickBooks Online. So, get ready to effortlessly navigate the platform and gain valuable insights into your business’s financial health.
Step 1: Accessing QuickBooks Online To kick things off, open your browser and search for the QuickBooks Online test drive with the URL containing intuit.com, the proud owner of QuickBooks. Make sure to select the United States version of the software and pass the robot verification process.
Step 2: Opening Financial Statements Once you’re in, head to the left-hand side where you’ll find the major financial statement reports. Right-click on the balance sheet and profit and loss, opening them in new tabs. Adjust the date range to 2020, enabling you to perform a thorough analysis.
Step 3: Vertical Analysis on Profit and Loss Focus on the profit and loss statement for a vertical analysis, comparing each line item to the total income. This approach allows you to understand the proportional significance of each element in contributing to your business’s overall revenue.
Step 4: Understanding Percentages Explore the percentage breakdowns, such as percent of income and percent of expenses. For income, assess how each revenue stream contributes to the total income, while on the expense side, analyze how individual costs relate to the overall expense structure.
Step 5: Comparative Reports Consider running comparative reports, allowing you to assess your business’s performance across different time periods or against industry standards. Evaluate quarterly performance and identify trends to make informed decisions.
Step 6: Customization and Saving Customize your reports to suit your preferences by removing pennies, bracketing negative numbers, and enhancing the visual appeal. Save your customizations, categorize them, and create a streamlined process for generating these reports at month-end.
Conclusion: Mastering QuickBooks Online for vertical analysis of your profit and loss statement is a breeze, providing you with valuable insights into your business’s financial dynamics. With the ability to customize and save reports, you can efficiently generate key financial analyses, empowering you to make informed decisions for your business. So, embrace the ease of QuickBooks Online and take your financial management to new heights.