Tài liệu Practice Made Perfect 18 ppt

148 PRACTICE MADE PERFECT

assets such as leasehold improvements, computers, and office furni￾ture—and in some cases, work in process and accounts receivable.

These activities consume cash. They also tend to cause the owners of

advisory firms to borrow money from a bank or to infuse their own

cash into the business, hence the term financing cash flow.

Tying the Financials Together

As you’ll see from the discussion on financial analysis in the next

chapter, the three financial statements are linked. Adding assets or

liabilities directly affects cash flow; profits or losses directly affect

the balance sheet. It’s possible to have cash and no profits, and it’s

possible to have profits and no cash. The relationship between the

two depends on whether your business is growing or shrinking and

whether you’re paying attention to the fundamentals of financial

management when you evaluate your success.

There are times when it’s acceptable to have the relationship

between profits and cash out of whack, as long as the condition is not

chronic. But in the long term, the goal should be to achieve harmony

in your financial statements. That harmony is measured by:

! A healthy balance sheet

! Strong cash flow

! Increasing profits

! Fair return to the owner

As you begin to apply discipline to the financial management

of your practice, you will also begin to see how such discipline

affects your ability to provide the ultimate client-service experience.

A growing, profitable enterprise has the financial resources to rein￾vest in the knowledge, technology, and tools that will make it easier

for clients to do business with it. Furthermore, having a financially

successful enterprise will help ensure that your focus as an adviser is

on your work and not on your own financial needs.