How to Simplify Reading Your Accounts for Business Success
For many business owners, the annual accounts feel like a door-stopper of numbers and jargon. However, buried within are just a few key figures that really tell the story of how your business is performing.
Here’s how to cut through the pages and focus on what matters.
1. Turnover – ‘What came in’
This is your sales for the year.
Going up? Great — it means more money is coming through the door.
Going down? Time to ask why — fewer clients, lower prices, or simply focusing on other projects?
Think of turnover as the headline figure — but not the whole story.
2. Gross Profit – ‘What’s left after the direct costs’
This shows your sales minus the costs of producing them (materials, subcontractors, printing, etc.).
A strong gross profit indicates that you’re charging the right price for your products or services.
A falling margin can signal rising costs or discounts that bite too hard.
It’s a good health check of your pricing and cost control.
3. Operating Profit – ‘What the business actually made’
This is the profit after deducting overheads, such as rent, administration, and marketing.
If it’s healthy, the business is covering its running costs comfortably.
If it’s thin or negative, you may need to trim costs or increase sales.
This is often the best guide to day-to-day performance.
4. Profit After Tax – ‘What’s really yours’
After tax, this is what’s left to pay dividends or keep in the business.
Think of it as your business’s “take-home pay.”
If it’s consistently strong, you’ve got options: reinvest, take more out, or build reserves.
5. Cash Flow – ‘What’s in the bank’
Profit doesn’t always equal cash. You can be profitable on paper but short of cash if:
Customers are slow to pay
You’ve stocked up too much
Or you’re funding growth.
That’s why cash flow matters just as much as profit. Here at Accounts Action, we like to include cash flow charts alongside your accounts — so you can see not just how profitable the business is, but also how money is moving in and out. It makes the big picture much clearer.
The Big Picture
Instead of drowning in pages of figures, look at these five numbers first:
Turnover
Gross Profit
Operating Profit
Profit After Tax
Cash Flow
They give you a clear snapshot of performance — and make your accounts far less intimidating.
To take home from this help sheet
Next time you receive your accounts, start with these five numbers. They’ll tell you most of what you need to know. And if something doesn’t look right — or you want to understand how to improve the picture — that’s when it’s worth a conversation.
