While Financial Accounting is necessary and useful for external stakeholders you are likely much more interested in Managerial Accounting, or Cost-Volume-Profit (CVP) analysis. These reports are useful for managers to better understand historical performance and more accurately predict future performance. Since the reports are not used by external stakeholders, it is not necessary to conform to GAAP standards.
Any number of reports can be created provided you have sufficient data. A fundamental benefit of the NeedleNine system is to arm you with this data and make business decisions based on facts, not guesses. Let’s look at a common example of whether to add an airplane to the fleet. First, we need to look at historical performance and determine demand. If we take monthly hours flown by each aircraft and plot them over time we begin to see trends. In this example you can see every time an aircraft is added (different color) there may be a little dilution over the short term but generally additional aircraft maintain an average of 100+ hours monthly.
You can also see hours flown are very seasonal so we must consider profitability over a range of hours flown. To do this we must conduct a CVP analysis and determine a break even. By itemizing fixed and variable costs in a spreadsheet we can quickly model a number of outcomes. To get as detailed as possible it is important to conduct a little research and calculate as accurately as possible engine reserve, preventative maintenance, insurance, fuel, etc. The result is a table itemizing profit (or loss) per hour flown.
Shown graphically you can easily see the hours that must be flown to break even operating this aircraft.
Armed with this information you can make an informed decision on a potential addition. If average hours flown are 100 hours a month, you can be reasonably confident this will be a profitable move provided average hours are not diluted below a 50 hour average. Clearly if you proceed with this purchase it should be accompanied with a marketing strategy to keep hours as high as possible.
As you can see, Managerial Accounting is a powerful tool. The CVP analysis can and should be conducted for every aspect of your operation such as ground schools, simulators and niche training as part of your business strategy.