We explain what financial information is and what its objectives are. In addition, the main characteristics of this information.
Financial information is the set of operational and strategic information that allows knowing and managing cash flows, organizing budgets , analyzing investments and making sound financial decisions.
Although they are sometimes taken as synonyms, there is a subtle difference between accounting information and financial information : the first uses the accumulation method, considers the account statement including assets , costs and profits; financial information focuses on the analysis of cash flows and tries to make decisions based on this, which more accurately reflects the state of a company .
It is the quality of adapting to the purpose of the user , since the financial information must serve for the elaboration of projections and to show the most significant aspects of the organization or company. To be useful, financial information must have other attributes, which are the following.
Financial information must be prepared with clear criteria and following a systematic method , not based on the potential users of that information. Although shareholders, investors and creditors will be the most likely to use financial information, it must be able to respond to the needs of all types of entities linked to economic activity.
It means that the operating system can be confirmed by other people , applying tests to verify the information produced. are not “deliberately” distorted and that, as a result of this objectivity, the financial statements reasonably represent reality, in accordance with the rules on which it was based, and of course there should be no manipulation of the information.
The financial information must be available when the user requires it ; this is very important because it is not always possible to foresee the moment when it is needed; for this reason, as a rule, it must be prepared with some regularity (monthly, quarterly, annual).
This is a fundamental characteristic of financial information, since cryptic , complicated information that can only be understood by those who have compiled it is useless; It must always be borne in mind that information is an instrument that must be useful for different users.
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