Understanding Financial Statements: Why Your Profit Doesn't Equal Cash in Bank

In this episode of 'Your Profitable Law Firm' podcast, Kelley explains the common discrepancy between reported profits and actual cash in the bank for law firm owners. She discusses the three critical financial statements—profit and loss statement, balance sheet, and statement of cash flow—that law firm owners need to understand to manage their finances effectively.

By using a real-life example, Kelley provides insights into where your profits might be going, such as owner distributions, debt payments, and asset purchases. She also offers practical tips on reviewing financial statements, planning for tax payments, and managing cash flow to ensure a financially healthy firm.

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