Published Financial Statements Of Limited Liability Companies | Income Analysis
The most important line item on financial statement of limited liability companies lies as the useful tool which determines a firms financial position as well as the firm performance.
The publishing of financial statements of limited liability companies on the most useful tools which can be classified as the balance sheet and the income statements, others are sub-listed as the investments, stocks etc.
A limited company statement of financial position format may include the following items as listed above, investment, stocks, cash at hand and banks, debtors, liabilities, proposed dividend, banks borrowings, taxes etc. Some of the most important line item on financial statement of limited liability companies are listed below,
Items On Published Financial Statements Of Limited Liability Companies
Investments – These are the investments made in subsidiaries, quoted and unquoted companies, these investments should also be added in a Published Financial Statements Of Limited Liability Companies. When the figures in investment items are high in relation to total assets, the lending banker should look closer to investigate the items, possibly call for the balance sheet of the company involved. Unquoted investments are difficult to dispose of as well as difficult to evaluate.
Stock – These are inventory purchased for the production of goods and services. It may consist of raw materials, work in progress, goods and finished goods. The stock held by a company depends on the type of trade. The stock turnover is usually important to the bank lending because he would be able to determine the number of days such stock is held.
Stock management is an important of any business, that is why it is listed amongst the most important line item on financial statement of limited liability companies. Business over stocking will require additional funding which will help or reduce the profit margin of the company and this would also tie up a disproportionate amount of working capital.
It is important to note that the most important line item on a published financial statements of limited liability companies includes two main parts which are the Balance Sheet and income statement. However, a financial statement has several components which often optional.
Balance sheet as one of the components of financial statement often reveals a firm statement of financial position, while on the other hand the income statement consists of all the statement of retained earnings.
One of the most important information about these two essential component of financial statement is that balance sheet and income statement has a subsidiaries of cash flow statement as well as notes to the financial statements analysis.
This is an important as well as critical aspect of the financial statement. Balance sheet provides information on the assets in the possession of a company, in essence, assets like cash, equipment or even accounts receivable, it also has a record of a firm’s liabilities which includes accounts payable as well as loans.
This is the combination of both profit and loss statement account. This part of the financial statement provides information on the level of company ‘s performance with in a specific period of operations normally monthly, quarterly or annually.
Retained earnings Statement
One of the most important line item on a published financial statements of limited liability companies is the retained earnings statements, this is the measurement of assets of a firms operation which has generated profits and the profits are retained in the business and not paid to shareholder as dividend payout. A large retained earnings indicates that the firm is doing well.
Cash flow statement
The cash flow indicates the sources of fund and what it is been used for during a period of time, cash flow provides information for the investors as well as creditors of the firms solvency.
Reports From Accountant
This refers to the reports from external accountant prepares financial statements, this is to say that the accountant’s report will be added to the financial statements. This item tell how deep the scrutiny on the firm’s finance has been applied and to checkmate if they deviate from the GAAP standard.
Notes – In most developed settings like Canada, a firm can chose the option of selecting the best preferred accounting standard which is in line with their financial statements. In the notes to the financial statements, the investor, creditors as well as readers can easily point out what policy choices that have been made.