Financial statements: importance, who uses and what to use

Financial statements are essential for a financial organization, business partners or a new investor to make their decisions.

It is through it that it is possible, for example, to obtain bank financing, as it shows whether or not the company can afford the proposed debt or analyze whether its investments are having an effect, or even assess the amount of its expenses and costs are consistent with the company’s return.

In general, we can say that the financial statements are the main informants of the health of an organization and it is composed of:

– A Balance Sheet, which is a summary of the rights and duties of the company;
– Report of calculation of accumulated profits and / or losses;
– Statement of Income for the Year;
– Cash Flow Statement;
– Statement of Added Value, in the case of a publicly-held company;
– Statement of the amount corresponding to the change in the company’s equity;
– Explanatory notes and analytical charts or anything else that may serve to illustrate the equity situation.
The so-called explanatory notes have the function of including all the information related to the applied accounting principle, as well as additional information that may be necessary for a good analysis and interpretation of the numbers.

 

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The Balance Sheet is divided into liabilities, assets and equity.

The asset refers to the organization’s assets and rights. These include investments, amounts receivable, the amount in stock, cash, bank, among others.

 

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The liabilities are the obligations with the tax authorities, with banking institutions and third parties. Equity is nothing more than the entity’s own resources, or its obligations to partners, that is, it is the result between liabilities and assets.

The profit or loss statement provides the balance for the beginning of the year and any adjustments that were necessary, such as a balance correction, the transfers that were made to the reserve and also the profit obtained.

The statement of income for the year, on the other hand, shows gross revenues from everything that was sold or received through the provision of services, in addition to deductions from expenses / costs and taxes paid.

 

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In short, it is the financial statement that will provide a true financial X-RAY of your company and, with that, enable new doors to be opened, new investments to be made or, when necessary, adjustments and changes in the conduct of business to be carried out.

Having the Financial Statements is mandatory, according to the Civil Code. And this regardless of the type of taxation of your company.

It will be done by the hired accounting office and, through it, it will be possible to know how to improve the results aiming at business growth.

 

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