The Executive Summary report is an overview showing key sections of Cash, Profitability and Balance Sheet items. In our sample company, we see that despite income being down by 36 % from the previous month, the cash inflow has increased based on the speedy collections. This resulted in a healthy cash surplus and favorable closing bank balance.
In terms of profitability, there has been an increase of 18 % despite the decline in income. A contributing fact is the overall reduction in expenses. In terms of Gross Profit Margin, there has been a 9.6% decrease due to the fact that direct costs were less in the previous month even though sales were higher. In contrast the net profit margin is higher for the current month due to the increased expenses in the previous month.
The current cash position reflects the ideal strategy of collecting cash from receivables faster than paying out cash for payables. The current ratio is reasonable given the industry standards.
We will need to evaluate these numbers in context with the year to date figures as well as comparison with the previous year-to-date (ytd) figures to see the bigger picture. Also budgeted numbers for the ytd period should also be reviewed for variances.