Nowadays, the business world is in constant growth. Firms now need to be agile in their decision-making. Financial statements play a very significant role in this process, as they provide key data for the firm’s development.
Business executives need this financial information to be updated to make decisions about future operations. It allows them to clearly understand the situation of the company at a given time. This way, the financial health of the business can be defined to establish a future outlook. This type of document is not only important for large firms, but also for small and medium-sized businesses.
What are the principal financial statements?
● Balance sheet: This type of financial statement shows the state of the firm at a given time. It assesses its situation broadly and accurately.
● Income statement: Also known as profit and loss (P&L) account or statement. It shows the revenues and expenses incurred during a specific period, and presents the liquidity of the firm.
● Statement of changes in shareholders’ equity: Shows the contributions made by shareholders and the distribution of utilities, as well the difference in the equity of the company and its share capital.
● Statement of cash flows: It shows the financial solvency of a firm and its ability to pay its debts.
Uses of the information in financial statements:
● For administration purposes: Facilitates decision-making.
● For business owners: Allows them to learn about the financial progress of their business.
● For creditors: It shows the liquidity of the company and their possibility to comply with all terms of the agreement.
● For the treasury: Proves whether the payment of contributions and taxes has been made.
We should remember that the interpretation and analysis of financial statements is key to a successful investment selection. Some statements show better information when investments are considered.
You are always on time to keep your financial statements in order. At QuAdrans Law and Finance, our accounting service allows us to prepare and emit your statements, whether these are simple, comparative, budgetary, to review previous years or special business reviews. Our main goal is to provide with what is necessary for your firm to continue growing.
Contact us!
Legal and Accounting Consulting in Playa del Carmen
