Five numbers every co-op board member should know
by ROC-NH staff
on November 20, 2015
Financial statements can seem like large, confusing documents with lots of numbers that don’t make much sense. But a cooperative’s monthly financial statements contain five numbers that every board member should know:
The answers to these questions are contained in three standard reports: the Balance Sheet, the Profit and Loss Variance or Income Statement (same report, different software), and the Cash Flow Statement.
The Balance Sheet contains much of the information that should be monitored and includes:
The Profit and Loss Statement or Income Statement contains your monthly and year-to-date financial activities.
Is there a surplus or deficit this month or year (question #4)? This statement shows your “bottom line.” It is literally the last line on the report called Net Income (loss), and shows whether you have a surplus or a deficit each month and year to date. If the bottom line number is in parentheses ( ), it reflects a deficit for that month or for the year.
The Cash Flow Statement shows any payments made for capital improvements and provides an overall view of how much cash went out and came in during a given time period.
The amount of information contained in financial reports can make them feel overwhelming. By keeping things simple and focusing on these five numbers, a board of directors can review reports easily and quickly, and can effectively monitor the community’s financial health.
Image courtesy of Dave Dugdale at LearningDslrVideo from his flickr photostream.
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