Are financial statements important for a business?
On One Hand: Useful for Obtaining CreditA financial statement prepared by a certified public accountant, or CPA, will lend credibility to your company’s performance as well as provide a basis for a comprehensive analysis of performance. Ratios such as gross profit margin, net income as a percent of revenue and the current ratio can be calculated. Regularly prepared financial statements also act as a deterrent to fraud.On the Other: Factor in the CostThe cost of financial statements will depend on the type of service provided by the CPA. Financial statements can be compiled, reviewed or audited, with audited financial statements requiring the most work and therefore costing the most.Bottom LineFinancial statements are invaluable to a company regardless of size. The cost to prepare the statements does not outweigh the insights the owners obtain about performance year after year.
