Accounting has been called the language of business. If you’re like most business owners though, you’ve probably wanted to learn as little as possible about this language. In my experience however, I’ve seen a high correlation between an owner having a basic knowledge of financial statements and operating a successful business. Remember, one doesn’t have to be fluent in a language in order to communicate. A few years ago a friend traveled to France and Italy and didn’t think it was necessary to learn a few phrases in these languages. After the trip though, he said that knowing how to say a few simple words such as “where’s the bathroom?” or “I want a beer” would have avoided a couple of minor emergencies and scored points with the locals. Likewise, learning a few key financial terms and ratios allows management to review past results and take corrective action as necessary. As one of my supervisors always used to say: ”you can’t manage what you can’t measure”. Continue reading “Do you Speak the Language of Business?” →