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Uses of Financial Data

Besides, financial data are business records of companies or organizations. Most companies use the financial data to evaluate their performance as well as coming up with marketing strategies on improving performance and profit. In addition, the financial data is used by other companies to determine the creditworthiness of a company that wants to do business with them; besides, such information is also a determinant of whether a company is complying with government regulations. The written reports are essential since quantifying the financial strength, performance, and liquidity of a company as well as reflecting the financial effects of business transactions and events on the entity. There exist many types of financial data that is used to determine the financial position of business; however, the following are the main types, they include asset, liabilities, and equity. 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.

On the other hand, liabilities 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. Also , liability 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.

The following are some of the reasons as to why companies and individuals keep their financial records. The financial statements of a company enable investors to determine the right time to channel their funds to the company in form of investment. Due to the fluctuations in a company’s trading period, the market value and the financial records enable the investor to determine 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. In addition , the records offers an overview of the company’s cash flows from operating activities, financing activities, and investing activities. In order 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.

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