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FINANCIAL STATEMENTS - Coggle Diagram
FINANCIAL STATEMENTS
INTRODUCTION
A financial statement is a document whose purpose is to provide information on the financial situation of the company to support decision-making.
The financial situation in the company is the situation according to the results obtained once the operations have been carried out at a date or period.
Business owners and managers need up-to-date financial information to make appropriate decisions about their future operations.
The financial information of a business is registered in the accounts of the ledger. However, the transactions that occur during the fiscal period alter the balances of these accounts. Changes must be reported periodically in the financial statements.
Accounting is a discipline of human knowledge that allows preparing general information about the economic entity. This information is shown by the financial statements.
The term "financial statements" includes: Balance sheet, profit and loss statement, statement of changes in equity, statement of cash flows (EFE), notes, other statements and explanatory material, which is identified as part of the statements financial
The fundamental characteristics that financial information should have are usefulness and reliability.
The utility, as a characteristic of financial information, is the quality of adapting it to the purpose of the users, among which are shareholders, investors, workers, suppliers, creditors, the government and, in general, the society.
The reliability of the financial statements reflects the veracity of what happens in the company.
CERTAIN FINANCIAL INDICES
Financial indices are relationships that allow us to know in an abbreviated way the financial situation in a company.
a.
Solvency:
Current Assets / Current Liabilities
b.
Liquidity:
Current Assets + Inventories / Current Liabilities
c.
Treasury:
Cash / Current Liabilities
d.
Turnover of Accounts Receivable:
Sales on Credit / Accounts Receivable
e.
Aging Accounts Receivable:
360 days / Accounts Receivable Turnover
F.
Inventory Turnover:
Cost of Sales / Net Sales
g.
Inventory Age:
360 days / Inventory Turnover
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PROJECTED AND AUDITED FINANCIAL STATEMENTS
a. Projected Financial Statements
Financial statement at a future date or period, based on estimates of transactions that have not yet been carried out; it is an estimated statement that frequently accompanies a budget; a proforma state.
b. Audited Financial Statements
They are those that have gone through a process of review and verification of the information; This examination is carried out by independent public accountants who finally express an opinion about the reasonableness of the financial situation, operating results and cash flow that the company presents in its financial statements for a particular year.
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements
Those that are published by legally independent companies that show the financial position and profit, as if the operations of the companies were a single legal entity.
• Balance sheet.
• Statement of Income or Operations
• State of Flows
• Others.