PPM Management, Central Jakarta: Company executives outside the finance division often experience some difficulties and limited understanding related to financial language. In fact, all functional problems of the Company have a close relationship or link with the financial department. Mastery of the financial mindset is a must for Company management to survive and thrive in the face of increasingly competitive business competition. And the Company's ability to survive in global competition depends on how much profit and growth achieved by the Company each year. In a growing and increasingly competitive business world, understanding the company's financial condition is the key to making the right and strategic decisions. One of the most important tools in this process is the financial statement. Financial statements not only provide a complete picture of a company's financial health, but also serve as a basis for performance analysis and future planning.

Definition of Financial Statement

Financial statement can be interpreted as a record of company activities carried out within a certain period of time, usually around 3 months, 6 months, 9 months, or even per year. From a business perspective, a financial statement is an important indicator to show the company's performance in terms of finance to investors. Of course, investors will be happy and choose shares for companies that have healthy financial statements. So, financial statements are very influential for a business. Because, financial statements will provide a formal explanation to readers regarding the condition of the company, such as income, losses, changes in capital, and cash flow. 

In general, a financial statement consists of several main components that reflect various financial aspects of the company, including:

1. Profit and Loss Report (Income Statement): This report shows the company's revenue, expenses, and net income during a specific period. 
2. Balance Sheet: A balance sheet presents a company's assets, liabilities, and equity at a specific point in time. 
3. Cash Flow Statement: The cash flow statement records the company's cash inflows and outflows during a certain period.
4. Statement of Changes in Equity: This statement shows the changes in owners' equity during a specific period.

Purpose of Financial Statements for Business:

1. Provide Accurate Financial Information: Financial statements provide a clear and accurate picture of the company's financial condition. 
2. Assisting in Business Decision Making: Effective business decisions must be based on solid and reliable data.
3. Facilitate the Evaluation of Company Financial Performance: Through financial statement analysis, management can assess financial performance over time.
4. Improving Transparency and Accountability: Well-drafted financial statements increase transparency and accountability.
5. Fulfilling Legal and Regulatory Obligations: Many jurisdictions require companies to prepare and report financial statements on a regular basis.
6. Supporting the Internal Monitoring and Control Process: Financial statements serve as a monitoring tool for management
7. Improving Operational Efficiency: By providing detailed data on income and expenses

How to make a financial statement

1. Collecting Financial Data: The first step in making financial statements is to collect all relevant financial data. 
2. Prepare Income Statement:
   • Income: Record all sources of income earned during the period
   • Expenses: Identify and record all costs incurred,
   • Net Profit: Calculate net profit by subtracting total expenses from total revenue.
3. Preparing a Financial Balance Sheet:
   • Assets: Register all company assets
   • Obligation: Record all company obligations
   • Equity: Calculate owner's equity by subtracting total liabilities from total assets.
4. Prepare a Cash Flow Statement:
   • Cash Flow from Operations: Record all cash inflows and outflows
   • Cash Flow from Investments: Record transactions relating to the purchase and sale of fixed assets or other investments.
   • Cash Flow from Financing: Record cash flows related to financing activities
5. Prepare the Statement of Changes in Equity:
   • Capital Changes: Record all changes in owner's capital
   • Retained Earnings: Record all profits retained in the company after dividend payments.
   • Dividend: Record all dividend payments made during the period.
6. Conduct Review and Verification: Once all reports have been compiled, conduct a review and verification to ensure the accuracy of the data.
7. Prepare Notes to the Financial Statements: Include notes explaining the accounting policies used, important details of specific items.

Training with the title “Finnon: Understanding Financial Statement” which was held on May 23-25, 2023 was held by PPM Jakarta. This activity was attended by Mrs. Putri as a representative of PT WLS. In general, financial statement is an invaluable tool for management, investors, creditors, and other stakeholders to assess the company's financial condition and prospects. This training is expected to be able to understand the meaning and function of Company finance as one of the main aspects of the Company as a system, then be able to understand the balance sheet and profit and loss financial statements and understand the important functions of financial management as a subsystem in the Company.

Source by :

– https://idstar.co.id/financial-statement/

– Admin PT WLS/Personal Doc.