In any administration of a company, financial information is important and necessary as it is the basis for a good decision, so that the decision made is sufficient and timely for executives. The financial administration is the information that the accounting gives part since it is essential for the decision making of the company.
The need for financial information is presented to users, so that they can formulate their conclusions about the financial performance of the entity. By this means the information and other elements of judgment the general user will be able to evaluate the future of the company and make economic decisions for the company.
The interpretation of sufficient financial statements on said financial information is historical and future facts that have interrelated elements. To relate them, an analysis is needed which consists of applying mathematical techniques and procedures.
The objective of the financial analysis is to obtain conclusions about the future of the development of the company's activity, on which it is based on all the information presented by the financial statement and requires analytical skills.
The need for this information ensures that the financial statements are made, since with the financial statements, the financial situation, result of operations and changes in the company's situation are expressed.
The importance of the financial information of a company, formulates the conclusions and information of the entity, of how it is. With this information, in general, the future of the company can be evaluated and decisions made, with which the company benefits.
The analysis of financial information is a set of three factors:
- Use of the appropriate tools. Use of reliable data. An analyst who manages and shapes the schemes of an efficient criterion of the company.
The basic financial statements must meet the objective of reporting on the financial situation of the company at a certain date and results of its operations and changes in its financial situation for the accounting period.
The importance of financial statements is to evaluate and make economic decisions about it. In order to make an investment and credit decision, the financing of the company to be in solvency, profitability.
Financial information when satisfying the user can form judgment of:
- The level of profitability The financial position, which is its solvency and liquidity The financial capacity for growth The flow of funds.
Users of financial information should take into account:
- The financial statements are expressed in currencies as your way of measuring should consider that their value changes based on economic events. The financial statements, especially the balance sheet, present the value for the business of its resources and quantifiable obligations.
