Reporting Glossary
Plain-English definitions for the key terms you'll encounter when reviewing your financial reports.
Accounts Receivable Aging Report
A report that groups outstanding customer invoices by how long they've been unpaid — 0–30 days, 31–60 days, etc. Used to identify overdue accounts and prioritize collections.
Accounts Payable Aging Report
A report that groups outstanding supplier bills by how long they've been unpaid. Used to track upcoming payment obligations and avoid late fees.
Accrual Basis
A reporting method where revenue is recorded when earned and expenses when incurred, regardless of when cash moves. Gives a more accurate picture of profitability in each period. Required for most Canadian corporations.
Balance Sheet
A financial statement showing what the business owns (assets), owes (liabilities), and the owners' stake (equity) at a specific point in time. The accounting equation always holds: Assets = Liabilities + Equity.
Cash Basis
A reporting method where revenue is recorded when cash is received and expenses when cash is paid. Simpler, but can give a misleading picture when receivables or payables are significant.
Cash Flow Statement
A financial statement showing the movement of cash in and out of the business during a period, broken into operating activities (core business), investing activities (asset purchases/sales), and financing activities (loans, owner contributions/distributions).
Comparative Report
A report that shows two or more periods side by side — for example, this year vs. last year, or month by month across the year. Useful for spotting trends.
Gross Margin (Gross Profit Margin)
Gross profit divided by revenue, expressed as a percentage. Measures how efficiently the business delivers its core product or service. Higher is generally better; compare to industry benchmarks.
Net Income
The "bottom line" — revenue minus all expenses. Positive net income = profit. Negative net income = loss for the period.
Net Margin
Net income divided by revenue, expressed as a percentage. Tells you how much of each dollar of revenue the business keeps after all costs. A key indicator of overall business efficiency.
Profit & Loss Statement (P&L)
Also called an Income Statement. Shows revenue, expenses, and net income or loss over a period of time. The most commonly reviewed financial report for day-to-day business decisions.
Retained Earnings
Cumulative profit that hasn't been distributed as dividends. Appears on the Balance Sheet under equity. Grows each year the business is profitable; shrinks with losses or dividend distributions.
Working Capital
Current Assets minus Current Liabilities. Measures whether the business has enough short-term assets to cover short-term obligations. Positive working capital = the business can meet its near-term obligations. Negative working capital = potential cash flow problem.
Year-to-Date (YTD)
From the beginning of the current fiscal year to the present date. Common reporting period — a YTD P&L shows all income and expenses since the start of the year.