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Understanding Your Financial Statements

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As department managers, how many of you spend time reviewing your department’s financial statements each month? To many, this might seem like a cumbersome task. Some might not even be aware that each department within the dealership has a version of a financial statement that relates to their respective operations. Furthermore, there are plenty of managers that review the statements each month, yet may not fully grasp what they are analyzing. Are your revenues increasing, but overall net profit staying flat? Is net profit decreasing or failing to increase at the rate that you would expect? Did you think your department had a good month, but all of a sudden your GM hits you with the reality that you actually lost money?

Stemming from various conversations with different department managers, a common disconnect exists between how some think their department is performing and what is actually reflected in the monthly or yearly financial statements. At a high level, a set of financial statements can give you a 10,000-foot view of how your department is performing. It is easy to compare year-over-year, and for many, if things are trending upward, things are considered good and that’s that. But what if things are trending downward? Digging into the individual accounts that make up the financial statements can provide a much clearer picture of where some issues might lie.

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Author

Jeremy Jacobs, Senior Associate | DHG Dealerships
704.367.5926 | jeremy.jacobs@dhgllp.com



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