P&L analysis

P&L and Balance Sheet analysis entails examining movements in key items and being able to drill down to explain what caused the change. This separates the bookkeepers from the real accountants. Any competent bookkeeper can produce a P&L and Balance Sheet. It takes someone with an understanding of the business, and how these two reports tie in with the rest of the organisation's reports and accounts, to be able to explain what the P&L and BS mean to the ongoing management of the business.

A proper understanding of these two reports and the business they represent will enable a good accountant to judge what trends are developing in the organisation and what actions may be necessary to minimise negative and to maximise positive ones.

Poor accountants look at reports as history, as showing only what happened. Good accountants take a forward view and can use them as a predictive tool to guide management.

In my experience, really good accountants are a rare breed.

Cheers, Ken Russell

Like Ken said. "Analysis" might also involve computation of various ratios and indices to confirm compliance with regulatory and/or contractual requirements; cash management; tracking of tax or other business strategies.

understanding of

predictive tool

yep, agreed....don't fotget the ratios and "window dressing" in the event the org needs loans, capitilaztion, bank reports and requirements....