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Using calculations in a financial report

admin — Sat, 27 Nov 2010 06:02:50 +0000

Consider the sin question of the categories of trade. The financial statements are calculated (sometimes raised in dollars and local currency) using the prevailing rating of 31 December last fiscal year. In a country with a volatile currency, the reality was distorted. This is especially true if much of the activity presided over this arbitrary date. The same applies to financial reports that were not adjusted for inflation in countries that have this problem. The report will look inflated and may reflect true earnings where leaks. The accounting of “average figures” (which uses the average scores throughout the year) may be more confusing. The only way they can truly reflect reality is if the bank has two sets of separate accounts: one in the local currency and a dollar (or other currency as the reference). Otherwise, fictitious growth could occur in the asset base, due to inflation of the currency.

Another example: in many countries, changes in regulations can seriously affect the financial report of a bank. In 1996, in Russia, for example, the Bank of Russia changed the algorithm for calculating an important banking ratio (the ratio to calculate the capital asset risk weight). Unless a Russian bank could write back their financial reports according to the new provision, were unrealistic changes in profitability.

Therefore, the assets are wrong: the figures represent the situation on 31 December. A 48-hour loan given to a client in collaboration can inflate the asset base in the crucial date. This misrepresentation can only be intimidated by the introduction of a calculation of “average assets.” Thus, some of these assets can generate interest and not working. The maturity distribution of assets is also very important. If customers on short notice can remove most of the bank’s assets, may be in trouble if they leak too many assets and can lead to insolvency.

Introduction of SAP FI Module

admin — Mon, 29 Mar 2010 10:23:31 +0000

SAP FI module able to do everything related to accounting and finance from a company. It can be thought of as the financial manager who can review the financial position in real time in accordance with existing procedures.

Because the resulting data is real time, so this module can help decision-making and strategic planning better. All modules MM (Materials Management), PP (Production Planning), SD (Sales and Distribution), CO (Controlling) and HR (Human Resources) module is integrated with FI.

All types of small-scale organizations, large-scale organizations benefit from the implementation of ERP financial modules. Financial module is the core of many ERP software systems. This can collect financial data from various functional departments, and produce financial reports as valuable as general ledger, trail balance, as balance sheet and quarterly financial reports.

This module of the ERP software will take care of all accounts associated inputs and their impact on the overall system. How to finance come and how it has been used. The total flow of money (Cash / Bank) and the total expenditure will be reflected here. As an after effect of this, management will be able to take their important financial decisions, budgeting, etc.. They can learn about the company’s financial position and record on a report called the financial statements.

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Types of Financial Report

admin — Sun, 28 Feb 2010 16:47:37 +0000

As already presented in previous articles about the accounting terms. Accounting is called the language of business because it is a tool to deliver financial information to parties who need it. The better we understand the language, then the better our decisions, and the better we are in financial management. To convey such information, the accounting reports are used or what is known as financial report. The financial report of a company usually consist of four types of reports, namely the balance sheet, income report, report of capital changes and cash flow report.

Balance Sheet, is a systematic list of assets, debt and capital on a particular date, which is usually made at the end of the year. Referred to as a systematic list, because the balance sheet is based on a particular order. In the balance sheet can be known how many of the company’s assets, the company’s ability to pay obligations and the ability of the company obtained additional loans from outside parties. It can also be obtained information about the company’s debt to the creditor and the amount of existing owners of investment in the company.

Report of income, is a summary of income and expenses of a company for a certain period, so that it can be seen profits and losses are experienced.

Report changes in capital, is a report showing changes in capital for a certain period, maybe one month or one year. Through capital changes report can be known causes of capital changes for a certain period.
Cash flow report, with the existence of this report the user can evaluate the financial report the company’s net assets changes, financial structure (including liquidity and solvency) and the ability to generate cash in the company’s future.