What is the need for financial information?

DESCRIBE the need for financial information please.





Thank you very much!|||We'll make an assumption that this question is referring to business financial information. Financial information is both forward looking and backward looking at the same time. In quickbooks, your previous history can determine numerous things such as, cash flow in and out, inventories increases and decreases, the the effects that purchasing large fixed assets have on both the balance sheet and the cash flow. If you have access to Quickbooks this type of information is readily available to you. One point of reference, you first have to put the base information into the program. I only mention that because one client did not understand that fact. If you go to the liability side of the ledger you have the same situation mortgage payment how much interest has been charged every month in every other liability which might have been a loan, lease, depreciation. This always effects your equity in the business and your ability to make profits. Financial information can also be used to make projections which will tell you where you are going. What you anticipate expanding your earning. With projections you have to be prepared to make adjustments as you go a long an example: utilities that you may have budgeted $1000 a month then your utility company sends out a notice that within three months you will be billed approximately 8.2% more. Whether or not this was unforeseen it will require an adjustment. Look at two different businesses. The hairdresser who uses a great deal of water in the process every day. The hairdresser also uses a great deal of electricity to heat that water, not to mention hair dryers are necessary. The second, might be an accountant's office there they use computers at just about every desk, overhead lighting is very intense, printers, scanners etc. Both businesses must make adjustments to their projections. In the case of the hairdresser the information and if stored properly for retrieval would tell the owner when the potential slow periods are and by how much. This allows the owner to make sales and discounts available during that period of time. One would have to say that financial information is the lifeblood of your business. It even gets down to the point of determining how much you pay in taxes lack of good financial information can cost higher taxes. If you have an additional question get back to me.