A Retail Liquor Store’s Success Story
After purchasing this retail liquor store from his father, the young owner was interested in learning more about the financial reporting that he was getting from his accounting clerk. He didn’t know where to start, because he wanted to use the financial strength of the store as a base to expand into other businesses. We met with him, reviewed his current reports, and talked to his accounting clerk before deciding on our approach and the services he needed to become a success story.
After making some changes to their general ledger to provide for more clarity in some of their reporting, we gathered the past 3 years of financial statements and reviewed them to provide an analysis of sales and profitability of the store over those years. This type of trend analysis is a good guide for how the business is progressing. We also discussed with the owner the types of financial ratios that might assist him in gauging the financial success and growth of the company. A series of analyses of the sales metrics of the company by product type gave further insight into the inventory turns and margin contribution of the various item groupings in the store.
In addition, we developed a structured month end close process, with a checklist and steps identified for the accounting clerk to follow at the close of each month. Discussing with her the monthly journal entries that she was making, we provided a format for her to track accruals and prepaid expenses, which made the close easier. It also provided a listing of the transaction detail that was helpful not only to the clerk, but the owner and outside accountant as well.