How to Check Company Financials Health?

How have you been planning to start your new venture? Are you in the industry for a number of years? No matter what it is, a lack of financial understanding can always make you feel on the edge. The knowledge of company financials health, company accounts, assets, liabilities and account statements are a must. There is a bunch of financial terms to understand. Here, our intention is to make you all aware of the importance of accounts and Company financial health check. How it can help in gaining an insight into your business? And others you might be thinking of doing business with The company financials help in knowing your company’s performance and about your competitors and like-minded start-ups as well.

A company’s financial health plays a keen role in assessing its performance and efficiency. Understanding the accounts and financial information could be more complex than conducting your day-to-day tasks like managing customers and making sales. Once you understand them, you’ll wonder how much it is useful for you both professionally and personally in the long run. Companies House is the UK’s legislative agency and a registrar of companies. All companies, be it small, big, active, inactive or dormant, governed by the UK Companies Act must register at Companies House. Each one of them must file annual company financial reports and information, and annual returns as per the deadline. They prepare company accounts, annual reports for Companies House every year.

The purposes to Check Company Financial information:

  • Report the financial activity of the company
  • Evaluate how much corporation tax, the company must pay HMRC (HM Revenue and Customs) the UK

Company directors are wholly responsible ensuring the annual accounts and reports are submitted accurately and by the statutory filing timeline. The copies of the same are provided to shareholders as  

Company accounts and the importance of accessing them

Company accounts provide an insight into the financial health of an organization over the 12-month period. Every year, they are prepared for Companies House and HMRC. While looking for new prospects, or expanding your existing business, checking the Company Financials data can be very informative. The financial status of companies with whom you are working or looking to work with  and knowing about their present status is crucial. Also, about a financial obligation (if any), which can help in making better decisions. The annual company account information consists of the following:

  • Balance Sheet – This financial statement provides an insight into the company’s assets, liabilities, and shareholders’ equity at a certain time. Simply put, it divides assets and liabilities. It indicates the financial health of the business at that time when the accounts were generated. The balance sheet is very helpful in comparing what is owned versus what is owed.
    • Assets – It is something that is owned by your business or from which you get an advantage. It could be a fixed asset or a current asset. Fixed assets are the things that can keep on a long-term basis such as vehicles, land, factories. Current assets are the things having a shorter life span like cash in the bank, stock items, outstanding invoices etc.
    • Liabilities – It is an obligation like a debt that requires  payment It can be a long-term liability or a current liability. In long-term liability, the money is not due to repay within the next year. In current liability, the money is due to repay within a year.
  • Profit and Loss Statement – It is different from the balance sheet. It depicts the performance of the company over time instead of just being a snapshot. In the statement, you can see the total revenue and total expense of the company throughout the financial year.
  • Cash Flow Statement – The cash flow statement evaluates the company’s cash movements ‘in’ and ‘out’ over the financial year. The cash flow is the real money that comes in the business and goes out during a particular period. The cash flow in the statement breaks into three categories. It involves operating activities, investing activities, and financing activities.

Note, if a company is generating a lot of cash flow, it is usually considered a healthy thing. But, in cases where the cash flow is negative, it is not necessarily a bad thing. At the end of the day everyone wants their businesses to thrive. For business owners, entrepreneurs, investors, or individuals, checking company financials, the company’s financial health check is a must. It helps in getting an in-depth understanding of the company. It is important to comprehend the company accounts, financial reports, and get clarity on how well the business is doing.

DataGardener is one of the UK’s one-stop data sources. It provides in-depth analytics of the company’s financial reports and the company director details in UK. Feel free to check company financial information within a click here. No matter if it is an old company or a start-up, the exact status of the business can be understood. Want to know how the financial reports from DataGardener can help? The financial reports of the statutory accounts can let you know about the following key aspects over the different financial years:

  • Turnover – It is the company’s total revenue, depicting how it conducts its operations.
  • Total Assets – It is the sum of all current and non-current assets. It should be equivalent to the sum of stockholders’ equity and total liabilities.
  • Total Liabilities – It is the sum of debts and obligations that a company owes to other parties.
  • Net Worth – It is the value that the company owns in the form of assets, minus the liabilities that it owes.

Each bit of information is estimated depending on different attributes. A few of them are currency, consolidated accounts, export, cost of sales, gross profit, wages and salaries, taxation, etc. Along with the statutory account’s information, it is possible to know about the financial ratios over the years detailing the following:

  • Current ratio – It is the liquidity ratio that measures the company’s ability to pay short-term due within a year.
  • Total debt ratio – It is the ratio of total debt to total assets. It is depicted as the proportion of company assets that are financed by the debt.
  • Creditor days – It is the average number of days that the company takes to pay suppliers.
  • Equity ratio – It measures the amount of equity that the company uses to manage its debts along with funding the assets.

The financial ratio is calculated depending on varied factors. It could be pre-tax profit percentage, or sales per networking capital, or gearing percentage, or equity in percentage, or creditor days, or debtor days, or liquidity per acid test, etc.  

Still, having some doubt? Just dig into the company financials on the DG platform and get access to all the information and ratios within a click. It is always advisable to  gain a better insight into the performance and efficiency of the business, determining the accounts status, filing obligations, liquidity, and solvency ratios. Accordingly, take the final call to expand the existing business or build new ones. So, check out the details of those company financial information, keep going and growing. All the very best!

If you want to find more details about UK business then feel free to contact us +44-333-444-0685 and e-mail at grow@datagardener.com

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