Frequently Asked Questions About Financial Statements

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There are many things that can be discussed in annual meeting of company. One of them is regarding the company's financial statements. The annual meeting is a very important moment to discuss what is happening and what will be planned for the future for the progress of a company.

Financial statement is one of the most important things for company. There are several questions that are most likely or very likely to be asked at the time of the meeting. The following is a list as well as a review:

Questions about Profit or Loss

This question about financial statements is certainly the most common question asked. Company owners would be very happy if the financial statements said a profit or profit. But what about when the report shows a loss? Then you can explain some of the elements that can influence it. Usually, losses occur due to:

  1. Purchase of inventory that is high but not balanced with the increase in selling price. Usually this often happens because companies do not want to be outdone by business competitors. Thus, the price will not be increased even though there is a high purchase of inventory.
  2. There are uncontrolled sales deductions. Usually companies will provide discounts to attract buyers so they are easily tempted. This is indeed very natural and often happens in a business. However, a discount should be given or issued at certain events or promotions. Of course this is so that the couple can be well controlled.
  3. Capital purchases of inventories from bank loans. You can explain the elements that occur in a company when questions about financial statements arise. Bank debt can occur for a company as additional capital. However, usually if the debt is used to buy inventory, there will be a profit that must be reduced because you have to pay interest on company loans.
  4. Uncontrolled operational costs. Companies that incur uncontrolled operating and spending costs will affect the profits and losses of a company.


Questions Regarding Previous Year's Cost Comparison

The next question is usually about the operating costs of a company. This is certainly very influential on the continuity of a business. Even though the company is in a profit or profit state. However, operational costs must be kept under control so that budget fraud does not occur.

Questions Regarding Comparison of Profit to Cash

Generally, this question about financial statements occurs when the owner of the company finds out if there is no additional cash, even though the company's financial statements are experiencing a profit. If this happens, you can also explain about some of the elements that can affect it. Among others are:

  1. There is a choked up cycle. This means that there is an imbalance between inventory spending and sales made. Thus, the money received from the sale has gone all out to purchase, there is even a possibility of a cash deficit or reduction from the previous one.
  2. There is a debt that must be paid. Of course this will greatly affect the state of the company's cash. Cash will come out when the company has to pay a certain amount of money for bank loans or other loan payables.
  3. The high level of capital withdrawal (prive) by company leaders. This often happens to individual companies.

 

Apart from the three questions about the financial statements mentioned above, there are still many possibilities that company leaders, shareholders or potential investors will ask about the condition of the company's financial statements. In fact, they will observe its progress to determine the company's future or long-term investment goals.

Then, by answering at least three of the possible questions posed. So, they, company leaders will know the true condition of their company. One of them is a question about a company's financial statements. With clear financial reports, it will be known whether a company is good or not.