4 Important Report Elements Limited Liability Company

The financial statements of a limited liability company are very important, because the success of a business is seen from the financial benefits.

 The financial statements of a limited liability company are crucial, because the success of a business can be seen from the financial gains that have been successfully recorded in it. At the end of the year or the end of the period, a company must prepare financial statements as a form of accountability for the management of the company to shareholders or capital owners.

Especially if the company is in a limited liability company format, where the business owner is plural with the manager or director of the company based entirely on the appointment of a team of owners of capital, so there is a clear legal responsibility of the director to shareholders or capital owners.

In this regard, a limited liability company's financial statements have been prepared. Actually, the financial report itself is one part of the accountability report from the manager or director to the owner of capital.

This accountability report itself actually includes many things such as program and expansion reports, activity reports and includes financial reports. This report will later become the basis for evaluating the performance assessment of the company's management by the team of capital owners.

The financial statements of a limited liability company are indeed crucial, because after all a company is a commercial unit where the value of its success is mostly reflected in the value of financial gains that have been successfully listed. And every program or expansion carried out aims to increase business profits, maintain business sustainability and extend the economic life of the business.

Then with the description above, what should you include in the financial statements of a limited liability company? The following illustrations will guide you.

4 Important Elements of Financial Statements
Limited company

Actually, the financial statements of limited liability companies are no different from the generally accepted financial reporting standards that have been known so far.

Because it is intended for multiple groups or the public, the report received is a standard financial report consisting of 4 important elements, namely:

Income statement

This report is simply the presentation of a report that shows the value of the company's profits obtained from total income, both cash and non-cash minus the total costs associated with the production and supply of goods, both direct and indirect costs.

The income statement displays information about the profit value of the business. Profit is an important element of the success of a business management. The better the value of the profit generated, the better the evaluation results will be. Later this profit value will also be an assessment of the credibility of the business's ability to earn profits by calculating the ratio between assets and profits.

Cash flow statement

This report is actually a general description of cash inflows and outflows, both incoming and outgoing from sales and non-sales income, as well as those that go out both for the cost of providing goods and business operations and for costs outside business operations.

If the profit calculation is intended to show business and sales performance, the cash flow report is more on the report to show the health of the company. A healthy company is indicated by a condition where at least income is balanced with expenses. This means that the company is able to finance any expenses that must be made on time.

Balance Sheet

The financial statements of this limited liability company focus on the value of assets compared to the value of the company's capital and liabilities. Or more simply is a picture of the wealth of the company. How much capital the company has and how much debt the company has. And the extent of the allocation of the combined funds into various types of assets.

The greater the ratio of capital to debt will be a picture of the company's financial strength. This shows that most of the assets of the company come from internal business capital or from the collection of funds from capital owners.

From the balance sheet report, you can arrange several ratios such as the ratio of capital to profit, assets to profit, capital to assets and several ratios that are considered as company health.

Statement of changes in capital

Especially for this report, you don't always need to make it separate from the balance sheet, but some limited liability companies consider it necessary to prepare it separately from the balance sheet.

This report describes the present value of capital after deducting the capital structure such as various related expenditures. payment of debt and added to the value of profit.

That was an overview of what you need to include in the financial statements of a limited liability company and how the composition in the financial statements of a limited liability company.


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