In the previous article Gain Profit from Your Balance Sheet Part 1, you have been given valuable tips on what key areas of the balance sheet you should go over with your Melbourne accountant or your Melbourne accounting firm. Below is the continuation of the said article.
Another important aspect that you also need to pay attention to when going over the balance sheet with your Melbourne accountant is the inventory turnover. This can be determined by the average annual cost of goods sold and divided by the average inventory.
As you already know, the amount that is invested in inventory takes up majority of the balance sheet. Discuss the inventory with the average shelf life of each product with your Melbourne accountant or your Melbourne accounting firm. You can also ask your Melbourne accountant about inventory control system if there is a real need for it.
You also will want to review the cost of your fixed assets such as vehicles, machinery, computers in comparison to its accumulated depreciation. Your balance sheet will reflect the Net Book Value of these assets. If your NBV is considerably low compared to the original cost of the equipment, then you can anticipate your maintenance cost to go up.
Seek the advice of your Melbourne accountant or Melbourne accounting firm as to whether purchasing new equipment will make more sense. You can also ask about the Return on Investment of the cash should you purchase a new one.
Loans and Credit Lines
Review your credit lines and loans. Whether you have a loan from a finance company or bank, if such loans have been in your books for over two or three years and their interests have not diminished, discuss refinancing options with your Melbourne accountant to get the costs down.