Are You Aware About These Important Characteristics of Your Financial Statements?

1. Are You Aware About These Important Characteristics of Your Financial Statements? Financial reporting is an essential element of the accounting & ​reporting system of a firm as it helps to present an overall precise look at the financial health of the company. Financial statements also give an idea of the overall financial state of an entire group of companies. It is important to get familiar with certain characteristics of financial reporting before focusing on individual corporate financials. So, let's take a look at some of those important characteristics: 1.Financial statement is your scorecard Doesn’t matter whether you are a 'do-it-yourself' or 'rely on guidance from an investment' type of individual, it does not hurt to know about important fundamental financial statement analysis skills.

2. Renowned businessman Robert Follet once said, "In business, you keep score with dollars, and the scorecard is a financial statement.” 2.Consolidated statements Consolidated statements are the combined financial statements of a group of companies. They show the combined activities of separate legal firms expressed as one economic unit. One of the main reasons of consolidating financial statements is that they are much more convenient and practical than separate statements for different entities. 3.Financial statements to use Financial statements used in financial and investment analysis normally include balance sheet, income statement and cash flow statement. They also consist of the analysis data of your company's shareholders' equity and reserved earnings. Income statement and balance sheet are usually focused by investors and analysts, but it is also essential to consider other elements, too like cash flow statement. 4.The confusing financial jargons Even if someone is working in an organization and possesses some knowledge of finance does not necessarily means that they must be aware of financial jargons (Special words or expressions used by a profession or group that are difficult for others to understand). Moreover, there is no appreciable standardization of financial reporting terminology, so, it becomes quite difficult for a beginning investor or banker to

3. understand every financial statement account entry. A good financial dictionary, however, can help you a lot in such cases. 5.The numbers game! The numbers in a firm’s ​financial statements describe its overall business; products, services, and events. It becomes easier to derive the financial indicators from these numbers if you can visualize the principal realities of the overall data. So, it's important to develop an understanding of what a company does - its products and/or services, and the industry in which it operates way before you worry about such numbers. 6.Non-financial information Information such as the state of the economy, the industry, competitive considerations, market forces, technological change, the quality of management, etc. are not directly reflected in a company's financial statements. So, it's important to recognize the financial statement insights to be able to effectively analyze the overall financial state of the firm. Financial reporting analysis and planning are very insightful and beneficial when done right. In fact, in all those numbers and figures, is the key to analyze the overall performance of your business in order to become more successful. It-Net by ​Imbibe Tech is the ideal cloud-based intranet platform for your business as it streamlines collaboration within your workplace improving overall productivity and communication. ​Contact Imbibe Tech​ today to know more.