Financial data refers to information that is related to business operation of companies and individuals. Such data are mostly used to evaluate the business performance as well as arrange strategies to use in improving the business performance. Besides, if a company want to cooperate with another enterprise, they need to check each other’s financial statements to determine their creditworthiness as well as to determine if each of the companies comply with government regulations. In addition, the financial reports are vital since they quantify the financial strength, performance and liquidity of a company as well as reflecting the financial effects of business transactions and events on the entity. Equity, assets and liabilities are the main types of financial data that are used by most companies to determine their financial position. Assets refers to properties owned by individuals and businesses, they include both tangible and intangible property, personal property and real property. The main types of assets include tangible property is any physical property, such as equipment, furniture, tools, or inventory whereas intangible property is non-physical property, such as a patent or goodwill, besides, real property is real estate and anything that is attached to it while personal property is any property that is not real property.
The other essential type of financial record is liability which refers to the financial obligations of a company, such as what the company owes to others including debt, which is money owed to a lender along with any interest as well as accounts payable, which is money owed to suppliers for goods and services bought by the company. On the other hand, liabilities can include other obligations such as wages, benefits, and taxes. Liability can be grouped as either short term or long term, short term refers to the obligation will come due within a year while long term is the liability that comes due in a year or longer. On the other hand, equity is the value of the company left over after the company has paid all of its liabilities out of all of its assets.
Financial statements are important to companies in a number of ways. Besides, lack of understanding of a company’s level of stock, the investors will end up missing out on buying and selling opportunities if they base investment decisions solely on a stock’s market value. The market value and the financial records of a company lets an investor know whether shares are currently affordable. Besides, experts use the data to analyze trends in assets and debts as well as the operating profit, net profit and gross profit. Moreover, the statements offers an overview of the company’s cash flows from operating activities, financing activities, and investing activities. For companies to understand how the financial market are doing, and where they may go in the future, they need to first understand the changes in the financial market in the past.