What Is The Sequence For Preparing Financial Statements?
Financial statements are the last step of a financial process. Financial statements are used by investors, financial analysts, and creditors to evaluate a company’s financial condition and trends. The annual report involves audited financial data that contains the firm’s financial statements. Every firm uses them to analyze and determine its performance and prospects.
What are Financial Statements?
Financial statements are written records that give you an idea about a company’s business activities and financial performance. They are a collection of summarized reports of an organization conveying its financial position, cash flows, financial health, etc. They are generally compiled in a particular order since the information of one statement is based on the previous one.
In other words, a financial statement is structured data. It has the Balance Sheets, Income Statement, and Cash Flow Statement.
- Balance Sheets give you an overview of the firm’s assets, liabilities, and stockholders’ equity.
- Income Statements inform you about the company’s revenues and expenses for the period.
- Cash Flow Statements (CFS) tell you about the amount of revenue generated by the company to pay its debt and fund other functioning expenses.
There has been a massive demand for financial analysts and CFAs (chartered financial analysts). Financial statements’ reports should be business-empowering, sophisticated, and simple. They must be prepared and produced with proper care. However, designing a financial statement is a challenging task as it carries all the important financial reports, account details, assets, and liabilities of the firm.
The various challenges faced by firms have raised the demand for financial analysts. In preparing financial statements, there are vital factors to consider, such as accuracy of the report, management and compiling of the data, collaborative measures, etc. The common problems faced in preparing financial statements are:
- Lack of information about the financial performance
- Requirement of manual entries, which are time-consuming processes. Entering every data in platforms in an Excel sheet takes hours, and this lack of a dynamic approach proves to be an obstacle.
- Inaccurate financial data; data that are entered manually will naturally result in human errors and miscalculations.
- Improving data quality by managing data using diverse systems; data quality is important for deciding the future financial status of your firm.
- Format changes when working in a standalone environment result in inconsistent data.
- Lack of efficient collaborative measurement; preparing financial statements and reports requires the implementation of a collaborative working strategy. Every team in the firm must coordinate and collaborate to prepare the financial data. The administration and financial divisions must work together in preparing such financial data.
- Adapting to constant regulatory changes in the financial environment; along with this, the accountant should also be aware of any latest regulatory changes. The frequent changes in rules and regulations for preparing financial statements are detrimental to deciding how the data should be assembled and how the financial statement should be prepared. The recent changes, such as IFRS 16 in 2019 and ESEF regulation, are a few examples.
Financial analysts can avoid these shortcomings by undergoing proper training in financial modeling. For acing the job as a financial analyst, you must attend skill-building programs which are offered in CFA courses and financial modelling courses. CFA is the most recognized course in the financial field, providing a plethora of high-profile jobs, such as those of research analysts, portfolio managers, and financial analysts in corporate firms, and even the dream role of an investment banking analyst.
In order to develop the skills, having a solid backup in the form of financial analyst training and placement at the right institute is crucial. If you are looking for a career as a financial analyst, Imarticus is the perfect place for you. Providing 180+ hours of the skill-building program, we have the best experience in training aspirants in the financial field.
Job-relevant skills crucial for financial statement analysis and financial modeling are taught by expert trainers from KPMG in India. Achieving more than 2400 career transitions, our career support modules stand out to be the best that will transform your career. Grow your skills and stand tall in financial modeling by enrolling in the financial modeling courses of Imarticus - these will give you industry certifications.
Here in Imarticus, you will be receiving experiential learning, which involves industry-oriented practical courses. Training is conducted by senior faculty members and experts from KPMG India. We also provide digital learning facilities by having a tech-based enabling system.
With a learning management system and tech-aided instructions, you will be guided every step of the way. After completion of the course, there will be mock interviews. These are expert-driven mock interviews that will train you to handle job interviews. There is also an Imarticus Portal service that gives you access to high-profile jobs. The syllabus is endorsed by KPMG India.
The program mentors guide you through courses as you proceed in the professional world. So, what are you waiting for? You can contact us through chat support or drive to our training centers in Mumbai, Thane, Pune, Chennai, Bengaluru, Delhi, and Gurgaon.