Benefits of Financial Reports for Business Owner – Financial statements are important documents of an entity that show the financial status of the company at a certain point in time. Financial reports help and provide insight into the performance, operations, cash flow and overall condition of a company.

What is a financial report?

Financial statements are a structured presentation of the financial position and financial performance of an entity. This report displays the history of the entity quantified in monetary value.

Purpose of financial report?

To provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of report users in making economic decisions.

The general purpose of financial reports is stated as follows.

1. Provide reliable information about sources economy, and company obligations with the intention of:

a. To assess the strengths and weaknesses of the company;
b. To show its financial position and investments;
c. To assess its ability to settle its debts;
d. Demonstrate the ability of existing sources of wealth for company growth;

2. Provide reliable information about sources of wealth net income from business activities for profit meaning:

a. Provide an overview of the dividend expected by the holder share;
b. Shows the company’s ability to pay obligations to creditors, suppliers, employees, taxes, raise funds for company expansion;
c. Providing information to management for use in the implementation of planning and oversight functions;
d. Shows the level of the company’s ability to earn profits in the long term;

3. Assess financial information that can be used to assess the company’s potential to generate profits.
4. Provide other necessary information about changes in assets and liabilities.
5. Disclose other relevant information required by the report user.

Types of financial reports

Income statement

Income statement, is a report to measure the success of a company during operation within a certain period of time or usually the report is done at the end of the year or the end of the month, according to the provisions of the company. And this report is made to explain the company’s current financial condition.

Cash flow statement

Statement of cash flows as one to be made per period. The cash flow statement is a report that contains income and expenses that occur. In a cash flow statement, information is presented in the form of cash income, the amount of cash received, expenses, privileges, debt payments, and so on.

Statement of changes in capital

Report on changes in capital is a financial report that serves to present reports on changes in capital in a company in a certain accounting period.

Balance report

A financial report in which there is some information about asset accounts, as well as matters that become the company’s liabilities in one period.

Conclusion

Of the many benefits of the financial reports mentioned above, there are still many entrepreneurs who have not carried out the accounting process. With ignorance or not having workers who can handle this field, it makes the company unable to know clearly the company’s financial position.

Without having correct and concrete financial reports, companies can lose capital, lose investors, lose creditors who are willing to provide loans to business actors and also lose a sense of trust in cooperating with your companies because they doubt your company’s performance so far.

Indoservice offers accounting outsourcing services center on businesses in Indonesia. At Indoservice, we have a dedicated team of professionals who will work with the needs of a good accounting, tax and payroll system for your business. You can count on us to provide the quality service that best suits your needs.

Contact us at email: admin@indoservice.co.id or Call/Whatsapp +62877-1449-8500 to get special prices from us.

All Blogs

Benefits of Financial Reports for Business Owner

See Also:

What is a financial report?

Purpose of financial report?