Financial statements are documents used for stating the financial transactions of a business process or organization on a yearly, quarterly or monthly basis. These kinds of statements are important for defining the status of a business. Moreover, it is a tool through which various financial aspects get revealed to the concern authority so that they could gauge on it for further development. A business organization or company is liable to release financial statement where funds from external sources are invested. However, these financial statements have enormous benefits as it helps to determine the financial weakness, strengths, and relationships that exist with other business organization. Despite of the kind of content, the benefits depicted by the financial statements are invariably the same. They are as follows:
- A well document financial analysis helps the company to gauge the status of debts the company have and whether it has the adequate liquidities for meeting it. Such an analysis helps the business to plan its future ventures.
- It is an effective way through which an organization can determine the Gross Profit Margin of the business process for a particular time period. This would enable the authority to invest accordingly on their upcoming ventures.
- Most importantly, a well drafted financial statement document helps the organization to make accurate forecasting on the debt to equity ration. This would not only give a clear picture of the company’s equity but would also gauge on it in details.
- Last but not the least, such financial statements are useful for maintaining inventory track records and it helps the company to realize whether the inventory is adequate or not for meeting up the approximate sales figure that is being projected.
For gaining all the benefits, it is essential to document such a financial statement which would essentially state the financial transactions authentically and comprehensively.