Business figures are read through three statements: the balance sheet, the income statement, and the cash flow statement. The balance sheet shows what you own and what you owe, the income statement shows whether you made a profit, and the cash flow statement shows where the money came from and where it went. For monthly tracking, three or four figures are enough, and on this page you'll learn how to find and read them yourself.
Am I really making money, and where is my money going? Business numbers aren't for the accountant; they're for you, and you can read them yourself. That's the thesis of Karen Berman and Joe Knight in Financial Intelligence: numbers are a language, and language can be learned. Greg Crabtree at Simple Numbers goes one step further: of all the statements, three or four figures determine everything. At this level, you learn to read those figures without any unnecessary terms—the balance sheet, revenue, cash, and the big difference between profit and cash on hand.
This page explains how to read each of the three statements, why the profit doesn't match the money in the account, and which figures were tracked each month. The in-depth treatment of each topic is provided by the six pages at this level, listed at the end.
Read also: When profit isn't enough, liquidity and hidden cash in the business.
| The question | Answer in effect today |
|---|---|
| What are the basic mirrors? | Balance sheet, income statement and notes, Article 13 of Law No. 25/2018 |
| Who necessarily drafts the cash flow? | Medium and large units of public interest, Article 13, paragraph 2 |
| What do the micronodes plan? | Abbreviated tables, Article 13, paragraph 3 |
| Where are the submitted reports located? | At the QKB, filed by July 31, Article 22 |
| Status of the rules | Law in force. Law No. 87/2026 awaits publication in the Official Gazette. |
The balance sheet shows, at a given date, what the business owns, what it owes to others, and what remains to you as the owner. Law No. 25/2018 calls it the statement of financial position, but its logic is summed up in three words: you own, you owe, and what remains to you.
The left side holds assets, cash, bills receivable, inventory, and equipment. The other side holds liabilities to suppliers, the bank, and the government, and the difference between them is your equity. When liabilities grow faster than assets, equity shrinks, and this is the first signal the balance sheet gives before any crisis.
You can find the read-aloud, along with a simplified real balance sheet, on the page. How to read the balance sheet.
The income statement is read from top to bottom, starting with period sales and working down layer by layer to net income. Each layer shows you where your money is being lost or gained.
How much tax is deducted depends on your regime. Businesses with revenues of up to 14,000,000 lek have a 0 percent rate until December 31, 2029, according to the website. zero regime until 2029. The page explains the mirror rows one by one. Income statement, explained.
Cash flow shows where money came from and where it went during the period, broken down into three streams: operating activities, investments, and financing. It's a report that can't lie, because it only tracks the actual movements of the account.
One thing that few businesses know is that this report is mandatory only for medium, large, and publicly interest entities, according to Article 13, paragraph 2, of Law No. 25/2018. Therefore, most small businesses don't have it in their files at all, even though they could prepare it themselves using their bank statements.
How it is constructed and how it is read, line by line, is shown on the page of cash flow.
Because profit is measured when the invoice is issued, while cash moves when the invoice is paid. Between these two moments fall three common items: uncollected customer invoices, cash tied up in inventory, and credit installments, which aren't expenses and don't reduce profit, but drain the account.
Be careful with the reverse direction as well. Profit cannot be freely withdrawn as personal funds; distribution is made by a partners' decision and is taxed at 8 percent as a dividend under Article 59 of Law No. 29/2023, as explained on the page of dividend.
Let's take a service business with annual sales of 6,000,000 lek and expenses of 4,800,000 lek. The income statement shows a profit of 1,200,000 lek, and the owner expects to find that amount in the account.
At year-end, customers still owe 700,000 lek on uncollected invoices, while the bank has withdrawn 400,000 lek of loan principal, which is not an expense on the statement. The amount added to the account is 1,200,000 minus 700,000 minus 400,000, so only 100,000 lek.
Both numbers are correct; they just measure different things. The full comparison, including cases where the opposite is true, is on the page. Profit versus cash.
Every month, three numbers suffice: gross margin, net profit, and cash on hand, compared with the same month and the same month last year. This is the essence of Crabtree's approach: a few numbers, reviewed regularly, are worth more than a long, unread report.
Gross margin is calculated with a single division. With monthly sales of 1,000,000 lek and direct costs of 600,000 lek, the margin is 400,000 lek, i.e. forty percent of sales. When this percentage falls for two or three consecutive months, something has changed in prices or costs, and this becomes apparent before it shows up in profit.
The third issue of Crabtree, the sales report with salaries, is explained on the page of the three numbers that decide everything, while the two health indicators, liquidity and profitability, are on the page. health indicators.
Your business figures are in three places: in the annual statements prepared by the economist, in the bank account, and in the invoicing system. The filed statements of each economic unit, including those of your partners, are held at the QKB, where they must be submitted by July 31 in accordance with Article 22 of Law No. 25/2018.
This page does not handle delivery obligations, deadlines, and fees; you can find those at the level of legal certainty, which is updated whenever a deadline changes. For the monthly follow-up, the one-page report format is ready for download at Resource Center.
Read also: How to file the financial statements with the QKB and the assembly resolution by July 31..
Every time there is a tax or financial change that affects your business, we notify you directly by email with a practical explanation.
Send me free notificationsThe balance sheet is a snapshot of a single date—what you own and what you owe on that day. The income statement is the movie of the entire period—how much was sold and how much was spent from January through December.
No, if you're a microenterprise or a small enterprise. Under Article 13 of Law No. 25/2018, it is mandatory only for medium, large, and public-interest entities, but tracking payments still serves you even when the law doesn't require it.
Because profit is recognized by the invoice, not by the payment. Uncollected invoices, purchased inventory, and loan installments pull money out of profit, as shown in the example calculated above.
In the QKB register, where every business entity files its annual financial statements by July 31. It's the fastest way to assess a new customer or supplier before selling to them on a deferred‐payment basis.
Three monthly reports each month, within two weeks of the month-end close, and full annual reports once a year. One hour per month is sufficient when the format is the same each time.
For reading purposes, this page and its six subpages are sufficient. Drafting spreadsheets and statements requires a professional, so most small businesses work with external economist.
What you own, what you owe, and what you have left, at a glance.
Read →From turnover to profit, step by step, without difficult terms.
Read →Where the money comes from and goes, operations, investment, financing.
Read →Why do you have a profit but no money in your account? Calculated example.
Read →Gross margin, wage efficiency, and net profit, according to Crabtree.
Read →Liquidity and profitability, two indicators simply explained.
Read →Accounting, financial statements, tax returns, and financial advisory services in a monthly package. The first consultation is free and with no obligation.
You read the numbers yourself, but someone has to prepare them accurately every month. We deliver the reports to you along with your three monthly figures and an explanation of what they show.
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