29/01/2023

Analysis of Financial Statements for Decision Making

The company’s financial statements have an important role to determine the development of a company. Through this report, you can find out whether the company has made a profit or a loss in a certain period of time. Generally, in finance and accounting, there is some data in financial statements, such as balance sheets, profit/loss reports, cash flow reports, and other notes related to financial reports. This data can later be used for various things, including as a reference in making company policies and building an ecosystem for company growth. Because after all, good financial performance can prevent fraud in the company and become one of the determinants of the company’s success in gaining profits. If you are a company owner who wants to make a profit, it is highly recommended to compile financial reports on a regular basis. The following are some of the objectives of preparing financial reports.

Knowing the Company’s Financial Condition

In managing a company, the financial sector must be the main focus that needs attention. This concerns various matters, such as investor confidence, the continuity of the company, to the fate of employees. By knowing the current financial condition, a decision can be made after analyzing the financial statements. The results will not rule out the need for changes within the company in order to fix a problem that has disrupted finances.

Increased Public Trust

A company will be more trusted by the public if it has good financial reports. For example, when someone invests in a company that has good financial reports, they will feel calmer. It’s different if the financial statements are not structured properly, the person’s trust will also be reduced. Generally, large companies provide their financial report documents publicly. Therefore, in preparing financial reports must be in accordance with existing standards.

As Evaluation Material

To anticipate things that are not desirable, the company needs to do an evaluation to find out the condition of the company. The stages can be started by analyzing the latest financial statements. That way, it will be known whether the company has good finances or not. Finance can indeed be called the core and determinant of the company’s journey.