Understanding Your Physical Therapy Financial Reports: The Key to a Profitable PT Practice

Are you a physical therapy practice owner looking to make sense of your financial reports? Understanding your profit and loss statement, balance sheet, and statement of cash flow is essential for running a profitable PT clinic. In this guide, GreenOak Accounting—industry leaders in PT financial management—explains what these reports mean, how to use them, and why they matter for your practice’s growth.

How to Read a Profit and Loss Statement for Physical Therapy Practices

The profit and loss statement (P&L), also known as the income statement, is the running scoreboard for your practice. It tells you what came in (revenue), what went out (expenses), and what’s left over as profit.

• Shows: All your revenue and expenses for a given period—typically month-by-month.

  
  

• Why it matters:

  • Spot trends: Looking at your P&L by month, you might notice a slow season in the summer or a spike every spring. Is that predictable, or was it a fluke? If you understand these patterns, you can adjust your marketing, plan client outreach, or even staff up (or down) accordingly.

    

  • Get proactive: If you see that business always drops in August, can you run a reactivation campaign for former clients before it gets slow? Or plan extra marketing and referral outreach in advance?

  • No more surprises: When highs and lows show up, ask yourself—were you expecting them? Do you know why they happened? If not, dig deeper.

  • Make smarter decisions: Your P&L should inform when you add staff, invest in new equipment, or make changes to your service mix.

Pro tip: Looking at your P&L by month—not just for the year—turns random numbers into a narrative you can use to steer your business.

What a Balance Sheet Tells Physical Therapy Practice Owners

The balance sheet is a snapshot of your practice’s financial health at a single point in time. It answers questions like: How much do we own, how much do we owe, and what’s left for the owner?

• The basic equation: Assets = Liabilities + Equity

  • Assets are what your practice owns (cash, equipment, accounts receivable).

  • Liabilities are what you owe (loans, credit cards, bills).

  • Equity is the value that remains for you, the owner, after debts are paid.

    
    

• Why it matters:

  • See if you’re “bleeding” your business: If you take out more than your practice is making, your equity shrinks. The balance sheet reveals if you’re building your business up—or draining it down.

  • Spot leverage and cash risks: Are you carrying a lot of debt compared to your assets? Do you have enough cash on hand for payroll and emergencies?

  • Owner draws and retained profit: The balance sheet shows how much profit you’re keeping versus distributing. Are you building equity, or just working for a paycheck?

Heavy lifting for profit: Profit isn’t just for owner draws. It also needs to build up reserves for emergencies, fund future investments, and help pay down debt. The balance sheet reveals whether your profit is doing all that “heavy lifting.”

Why Cash Flow Statements Matter for Physical Therapy Clinics

The statement of cash flow answers the classic question: “Where did all the money go?” Even profitable practices can run into cash crunches if they’re not watching this report closely.

• Shows:

  • Operating activities: Cash in and out from day-to-day business.

  • Investing activities: Money spent on equipment, property, or investments.

  • Financing activities: Loans, repayments, and owner draws/distributions.

    
    

• Why it matters:

  • Stay ahead of trouble: You can be profitable on paper and still run out of cash—especially if collections are slow or spending is high.

  • Spot problems early: Big swings in cash flow may signal issues or opportunities.

  • Plan for growth: Ready to expand or buy equipment? The cash flow statement shows whether you can really afford it without putting the business at risk.

Hidden Knowledge: Using Reports to Learn, Forecast, and Plan

Your financial reports aren’t just about what happened last month—they’re your best tools for planning the future.

• Forecasting: Want to know what will happen if you open a third location? Look back at your reports from when you opened your second. What was the cash impact? How long until profit returned? Those patterns are incredibly useful for planning your next move.

• Benchmarking: Are your debt, cash, or equity levels healthy for a practice your size? Your reports tell you if you’re on track—or if you need to adjust.

• Real insight: Monthly trends in your P&L, balance sheet, and cash flow can help you anticipate slowdowns, schedule marketing, and make proactive decisions.

How GreenOak Accounting Helps PT Owners

This is where GreenOak shines. We don’t just send you a stack of reports—we help you truly understand what the numbers mean and what to do with them.

• We break down your P&L and balance sheet in plain English.

• We help you spot the trends, risks, and opportunities that are easy to miss.

• We help you forecast and scenario plan for big moves, like opening a new location.

• We show you how your profit is (or isn’t) working for you—paying you, building reserves, and fueling growth.

• We help you make every decision with eyes wide open, confident in the financial impact.

When you know your numbers, you lead your practice with clarity and confidence—not guesswork.

Frequently Asked Questions About PT Financial Reports

Q: What financial reports should every physical therapy practice review regularly? A: PT practices should review their profit and loss statement and balance sheet monthly to monitor trends, manage cash, and plan for growth.

Q: How can a PT owner use a P&L to improve profitability? A: Reviewing your P&L by month helps you spot seasonal trends, control expenses, and make timely marketing or staffing decisions to boost profit.

Q: What does a balance sheet show in a PT business? A: Your balance sheet shows what you own, what you owe, and your equity. It helps you understand your practice’s overall financial health and long-term value.

Ready to Understand Your Physical Therapy Financial Reports and Grow a More Profitable Practice?

Contact GreenOak Accounting—the leader in PT financial management—for a free consultation. Let us help you unlock the goldmine in your financial reports and build a smarter, more profitable physical therapy clinic.

---

This post is for informational purposes only and is not a substitute for professional accounting or legal advice.