Role of accounting services in business growth
Making successful business decisions depends heavily on financial analysis. Understanding the financial picture is paramount whether you want to cut costs, increase revenue, or expand your business. The following article by S4B Vietnam will guide you on how to analyze financial statements, and provide formulas to calculate the most important financial indicators from business financial statements.
1. What is Financial Reporting & Analysis?
According to the 2015 revised Accounting Law, “Financial statements are a system of economic and financial information of an accounting unit presented in the form prescribed in accounting standards and accounting regimes.”
Financial statements include the following documents: Balance sheet, Business performance report, Cash flow statement, and Notes to financial statements.
Financial Reporting & Analysis is the process of reviewing, examining, collating and comparing financial data in the current period with past business periods. The goal of this analysis is to provide detailed and in-depth information about the financial situation of the business, helping business owners and stakeholders such as investors, banks, and management agencies make smart decisions.
Financial Reporting & Analysis is a complex and multi-dimensional process, there is no fixed and unique formula for this. The approach and method of analysis may vary depending on the specific purpose and context of the analysis.
Role of accounting services in business growth
2.How financial statements help businesses
2.1 Assessing the financial health of a business
Thanks to financial statement analysis, businesses can conduct SWOT analysis in financial activities – identifying relevant strengths, weaknesses, opportunities and challenges.
In addition, financial statement analysis helps businesses evaluate their financial performance through important financial indicators such as profitability, solvency, financial management ability, etc. These indicators indicate the level of efficiency of the business in using capital resources, profits and business operations. From there, businesses can make smart business decisions and consider adjustment strategies.
2.2 Help stakeholders make economic decisions
Financial statements are a “snapshot” that helps shareholders evaluate the performance of their investment in the business. Through financial statement analysis to provide financial indicators such as profit, profitability ratio, equity ratio, dividend payout ratio, etc., shareholders can assess whether they are receiving significant benefits from investing in the business or not, and how financial statements help businesses.
Financial statement analysis is very important for investors because it can provide information on the company’s revenue, expenses, profits, debt burden and ability to meet financial obligations.
3. Key financial reports: Balance sheet, P&L statement, cash flow statement
3.1 Balance Sheet
The balance sheet (B&L) is a consolidated financial statement that reflects the total value of the existing assets and the sources of those assets of the enterprise at a certain point in time.
The data on the B&L shows the total value of the existing assets of the enterprise according to the structure of the assets and the structure of the capital sources that form those assets.
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3.2 P&L statement
A P&L report is a financial document that provides an overview of revenue, expenses, and profits. The data in the report provides information on profits or losses for a certain period. In fact, it is released quarterly and annually. The report will display the net profit in detail. Thereby showing the company’s ability to manage the business. Specifically by cutting costs and boosting revenue.
The Profit & Loss report also allows managers to check the trends of related financial figures. They then plan to allocate resources and budgets accordingly. In addition, the P&L report is also an analysis that shows basic profit and loss. They help investors consider whether to buy or speculate on the company’s stock.
3.3 Cash Flow Statement
The cash flow statement (BCLCTT) is a part of the financial statements, showing the cash flows generated and used in the business operations of the enterprise over a certain period of time, usually a fiscal year.
This report shows whether the company is generating enough cash to cover expenses and whether the company is taking on too much debt.
4. Role of accounting services in business growth
If in the past, creating and analyzing financial statements required a lot of time and manual tasks, today, this process has been automated and streamlined thanks to role of accounting services in business growth.
Accordingly, automation is a key feature of accounting services in Financial Reporting & Analysis. No more time lag. No need to spend hundreds of hours of manual work, which makes the data worthless when the work is completed. Now, businesses can have real-time financial data in their hands, helping to quickly build and analyze financial statements, and make important decisions in real time.
Accounting services also have the ability to automatically create online financial dashboards, visualized in many different ways, making them easier to understand for those without accounting expertise. These dashboards can even be shared internally, providing effective support for meetings on financial statement analysis.
There are so many regulations to follow and deductions to take care of, while there is still Financial Reporting & Analysis that you have to calculate accurately. How to make this process less stressful?
In short, choosing a modern financial analysis support service will be a “powerful arm” to help businesses ensure the accuracy and transparency of financial statements, take advantage of valuable information from here, and be able to make business decisions quickly and reliably.
Check out our expert tips to simplify and answer how financial statements help businesses.
S4B Vietnam
- Address: Unit 701B – 701C, Tower A, Handi Resco 521 Kim Ma Street, Ba Dinh District, Hanoi, Vietnam.
- Tel: + 84 24 3974 4181
- Email: service@s4b.com.vn
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