The financial stability statement is a document prepared by a company which throws light on the ability of the company to remain in the business in the long run without incurring significant amount of losses in the process of doing business. To assess the stability of the company it is very important to carefully study and analyze the firm’s financial statements and draw conclusions. This statement is highly valued by all the parties dealing with the company like creditors, buyers, suppliers, government and many more.
Sample Financial Stability Statement
The following is a financial stability statement prepared by Crescent Cradle a very eminent name in the construction business in U.S.A.
- We are associated with Mr. John Darry one of the best certified public accountant and our financial statements are prepared and audited by him.
- We adhere to all the rules and regulations regarding the financial statements and they include balance sheet, statement of income and retained earnings, statement of cash flows and notes to accounts.
- The financial statements are prepared and presented in accordance with the generally accepted accounting principles and audit is performed in compliance with the widely accepted auditing standards.
- We do not work on cash statements and prefer income tax basis statement by using reducing balance method of depreciation. It is clearly evident from our balance sheet that we don’t have any past due liabilities.
- The cost of funds borrowed is lower than the returns generated by assets which are controlled by the business. This shows that we have used the capital gearing efficiently to accelerate our profits.
- We have a favorable current ratio of 2:1 indicating low risk.
- The shareholder’s equity or net worth account of our company has a positive balance which is greater than the goodwill of the company.
- Our cash flow statement shows that the short term assets are funded by short tenure borrowings and long term assets are funded by long term borrowings reflecting long viability of the business.
The above information provides you with enough evidence to ensure the financial stability of our company.