The following checklist will help you analyze your financial statements on a monthly basis.

• Determine net profit or loss and how this compares with your budget.
• Make monthly and year-to-date comparisons of income and expense. Some items such as administrative salaries should be compared on an actual basis; others should be compared on a percentage basis.
• Circle income or expense items that have changed substantially, and check your records to determine why they have changed.
• Determine if seasonal fluctuations such as holidays or weather would materially change the statements.
• Determine any trends. You may want to graph your income and expenses in order to help you determine these trends.
• Compare your Income Statement to your Daily and Weekly Control Sheet.
• Determine whether you are making enough profit to pay all your bills.
• Adjust net profit for expenses not properly stated, such as reasonable salary compensation for a working owner or a reasonable rental factor if the building is owned and not leased.
• If an inventory has been taken, consider adjusting the financial statements for any large variance in stock.
• Determine that accounts payable and receivable listed on the Balance Sheet are correct.
• If material or labor costs are higher, determine whether an increase is attributed to usage or prices.