Financial Reporting

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A financial report means that a company prepares and publishes its financial reports. These reports are a representation of the financial performance of a company in a given period of time, traditionally one year. Hence, a reference is often made to the term annual accounts. The recipients of these reports are external " interested parties, also known as " stakeholders " " as investors and the legislator. Each company is obliged to prepare the annual accounts and deliver them to the Chamber of Commerce.

What is a Financial Report Made of?

An annual account, the result of a financial report, is made up of several elements: a balance sheet, a profit and loss account and an explanation of both elements.

The Balance Sheet

An overview of all assets, debts and the equity of a company.

The Profit and Loss Account

The profit and loss account offers an overview of all the annual revenues and costs of a company. In this way, you can see if a company is making profits or losses.

IFRS " International Financial Reporting Standards "

The different parties involved in a company's financial report don't always work in the same way or with the same software. Therefore, some standard standards have been developed to facilitate and accelerate the exchange and processing of financial data between all parties.

IFRSs are best known for their Anglo-Saxon terminology IFRS " International Finance Reporting Standards ". IFRSs are global standard standards for accounting. They were developed by a non-profit organization, the IASB " International Accounting Standards Board ". These international guidelines are particularly interesting for those companies with presence in different locations around the world.

What Software is There for the Financial Report?

The rules mentioned above for the financial report can make the creation of a company's reports faster and more efficiently. Most companies use software to make financial reports. Hence it's important that the software is compatible with IFRS. For example, making sure the software provider has the certificates. Most ERP systems have modules for creating financial reports. There are also specialized financial applications.

How is a Financial Report and a Management Report Different?

There is a very clear difference between the financial report and the executive or executive report. The financial report is data that's intended primarily for external parties. The results of the management report are intended primarily for internal use " CEOs, owners, etc. ".

Financial reports are, for most companies, required by law. The directive report, however, is not.

The financial report refers to the company as a total, while the management report is generally fixed on a specific aspect, or on different aspects of business operations, for example, a specific product.

Analytics and Forecasting

Two concepts that are closely linked to the executive report are analytics and forecasting. Based on these real and "dry" financial data, a company tries to discover its possibilities in the market and avoid certain risks. Therefore, often, this is the reason why business knowledge is discussed, rather than company information.

The forecast consists in the prediction of certain fashions, based on historical data. In this way, for example, one can predict the ideal level of stock for a certain period. These predictions are based mostly on information from several channels. If the forecast depends largely on the weather, then the weather data is included in the forecast. But, historical data is also taken into account " such as the amount of sales from previous years in the same period ". With the help of a management report, directors can make strategic decisions that they could not have taken in any other way, or that they doubted.

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