The business scenario has changed today as many business houses are leading in today’s financial market and especially in the developed countries like America where you can find many large business houses. But it can be seen that their financial statements are not found to be adequate may be because of much workload or sometimes the staff is not trained properly on the particular accounting system. John Binkley is of the view that this condition may pose a danger to the very existence of the company too.
Importance of Clean Financial Position
In the present times, it has become a necessity to have a strong position in the market which helps the business house to grow and develop. Even if you are planning to sell it, merge or acquire any new business house then also it is mandatory to have a clear picture of your financial statement.
John Binkley states that you may be an honest company personal but the credibility and stable financial position of your company are only known by the clean financial statements. This will definitely help you in cracking the best deal with the merger or an acquirer and not only this, it will also help you in updating yourself. The important points in this area can be discussed as under:-
- It provides you with a clear picture of your business and if you are aware of the facts and figures of your company then you can very well answer the buyer or the merger company.
- The financial statements which are made by the professional or a firm which is hired by your company will be able to depict adequate information about the profitability position of the market which may attract other companies too.
- The innovative and sound accounting system should be followed by the company personals or the professional accountants hired by the company. This will help in calculating the profits of the company and even their asset position.
- The neat and clean financial statements prepared by the professional or any firm hired by the company does not mean evading of taxes. This is a big loophole in the present market system where half of the business personnel do not present a strong picture.
- The company should also help the merger or the buyer companies to get a fair view of their respective company in the market and should not hide anything for cracking a great deal.
Helps in Knowing the Market
If your company has made a sound financial statement then it helps in knowing about the market in a better way. You can come to know about the recent trends prevalent in the market according to John Binkley and even if you have made up your mind to sell your business also, one can also get more value on the basic economic value of their business. This will definitely be a win-win situation for both seller and buyer or even the merger and everyone can earn suitable profits.
Lastly, it can be said that the clear-cut financial statements help the company to get remarkable returns.