Main financial reports of an enterprise
Forms of financial statements in Finnish companies
A financial report is a reporting form composed by business entity. It is a report of the company's activities over the fixed period, shown in specific figures. Financial reports show the current situation in the business and its dynamics. Reporting forms also can help to track where the money goes, to see the amount of profit at the current moment and to understand whether the company is profitable or not in general.
In businesses often are used two types of reporting: financial and accounting, which play an important role within a business, but this role is different. Accounting reports are created usually to submit data to the tax administration, whereas financial accounting helps to see the real money situation and make decisions.
Despite the fact that each owner has the own notion about financial statements, there are international standards in the field of financial reporting which are recognized worldwide. One of these standards runs that there are three main forms of financial statements:
- Balance sheet (in Finnish, tase)
- Profit and loss statement or P&L (in Finnish, tuloslaskelma)
- Cash flow statement (in Finnish, rahavirtalaskelma, kassavirta)
Thus, companies conducting financial accounting always make up a balance sheet and income statement, which are the main reports of all organizations. The balance shows what a company owns and what are the sources of financing whereas P&L statement shows the financial results and consolidated information about the activities of the company. Another report that is not less important than two previous one is Cashflow, which shows the movement of money through the company, i.e. the cash that is flowing in and going out of the business.
When these reports are properly prepared and organized, take into account the specific field of enterprise, then they provide complete information about the finances of the enterprise, company’s assets, its resources etc.
Different important financial indicators and coefficients can be calculated from the data presented in these reports. All of these reports are crucial for any business!