Tuesday, 1 October 2019

Key elements of a financial report

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Financial statement of the company prepared each year to represent the financial condition of the company. Financial report gives a report of the company’s financial health and its performance of the entire period. The financial reports are prepared to give an overview and report to the stakeholders, board members, owners and regulatory authorities. The report gives them the idea of the overall performance of the company’s financial condition. Whether the company has faced any financial problems or it has been a profitable year for the company.
There are six main elements of the financial report by Ph.D dissertation writing service.


Assets

Assets are the resources of the company. Assets could be in any form, the financial and non-financial assets. Human resource is also an asset of the company. In financial report, the list of those items is prepared as assets that company owns and it has future value. The assets can be of any type, the physical assets that include the factories, building, furniture and equipment’s and financial assets are the accounts receivables. The list of intangible assets is also prepared in the financial report of the company such as brand value and trademark.

Liabilities

Liability is a major element of the company’s financial report. Liabilities are the obligations of the company towards other companies and individuals. In a financial report the list of those items is prepared which can cost money to the company in future. Liabilities are both short term and long term. The short term obligations include the accounts payable, rent of the building and the payroll payable, it includes that payroll which has been prepared but not paid yet. The long term liabilities include the cost of the environment that is affecting the company and debt etc.

Equity

Another part of the financial report is the equity. Equity is the amount left if the company sells its assets and pays all its liabilities. The equity belongs to the shareholders and owners of the company. Equity comprises of the money invested by the shareholder or owner of the company in the business or the profit and losses that are earned by the company on behalf of its owners and shareholders.

Revenues

The financial report section on revenue lists cash inflows from operations. The company produces goods and services and sells them to customers, and the money earned from this process are the revenue.


Expenses

Expenses are cash outflows resulting from operations and overhead. Companies have expenses that they attribute directly to the generation of revenue, but they also have expenses independent of operations. Typical operating expenses are salaries for production workers, materials used in production and shipping. Overhead expenses are costs such as rent and management salaries, which generate cash outflows even in the absence of any operations.

Profit and loss

Profit and loss statements summarizes the performance of the company. When expenses are subtracted from revenues, it gives the company profit and loss statement. Profits or losses over several years affect the value of the company by increasing or decreasing total owner or shareholder equity.


                                                      About the author:

Jacob Oram is a research writer affiliated with a Ph.D dissertation writing service provider company. He helps and guides students in writing, editing their academic writing tasks. He also writes on social issues, problems of youth and other topics of his interests in his free time.

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