Importance of Year End Reporting

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Presentation transcript:

Importance of Year End Reporting

Balance Sheets Five Areas Addressed by a Balance Sheet 1. Solvency – do assets exceed liabilities 2. Liquidity – ability to meet financial obligations 3. Risk-Bearing Capacity – how much loss could the business sustain? 4. Collateral Identification – what assets are available to help in securing a loan? 5. Business Trends – evaluating records over multiple years for comparison purposes

Inventories When to Inventory? What to Inventory? January 1st & December 31st What to Inventory? Current Assets Items with useful life less than a year Non-Current Assets Items with useful life over a year

Income Statements Five Primary Uses 1. Summarize revenues and expenses 2. Determine profit or loss 3. Calculating profitability & financial efficiency 4. Determining repayment capacity 5. Loan applications & refinancing

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