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Why Having Precise Financial Statements are Important?

Posted 2 months ago by JAC Outsourcing

Why Having Precise Financial Statements are Important?

​Showing significant growth is crucial for startups to attract more investors. Thus, some companies focus more on sales and product development than bookkeeping in the early stages. These situations make companies do not have reliable financial reports. Having a precise financial statement is vital for the sustainability of your business. A clear financial report will support you in making decisions for the company, making projections, and calculating the return on investment. It helps you know your finance positions and prepare plans precisely. Without financial statements, projects will run with no clear investment return on investment and no information on how resources are allocated.

Financial statements contain crucial information about a company's financial health. It shows the company's conditions financially that will affect the business activities and investor decisions. A clear financial report will support you in making decisions for the company, making projections, and calculating the return on investment. These are four main financial statements that should be prepared regularly:

  1. Balance Sheet

  2. Income Statement

  3. Statement of Cash Flow

  4. Shareholders' equity

These reports contain important information that can detect a company's financial health. There are many metrics that you can use to evaluate. However, these are the main ways to determine your situation.

  1. Analyse the Balance Sheet. It shows the position of assets, liabilities, and owners' equity to analyse the liquidity of your business, tangible assets, and debt to equity.

  2. Analyse the Income Statement. Income statements show company performance through revenue, expenses, and profit earned over periods.

  3. Analyse the Cash Flow Statement. It provides information on how a company uses its cash, its source of money, and where the money is spent.

  4. Financial Ratio Analysis. Financial ratios help you determine your company's overall financial health by comparing it across periods.

The fact is...

many companies are not aware of the important of having an accurate financial report. They are too focused on main activities and set aside the bookkeeping. In some cases, in startup companies, showing significant growth is crucial for startups to attract more investors. Thus, some companies focus more on sales and product development than bookkeeping in the early stages. Without proper financial statements, you will have misleading information and misanalysis that will affect your business sustainability.

How JAC Outsourcing Can Assist

Hearing these needs, JAC Outsourcing provides you services that will help you have an accurate financial report. Through our service Financial Statements Preparation and Reporting, we will check, calculate, and arranges financial statements activities to ascertain that you have factual statements that follow management accounting policies and tax regulations.

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