Structure of financial statement of limited liability companies is an important aspect of a business concern. It is important to understand the bedrock of financial statement of limited liability company in order to help in assessing any sort of borrowing propositions.
A published financial statements of limited companies usually gives us the important as well as the crunch of the firm financial base, it help us to establish facts quickly when there are variations in the balance sheet figures. A balance sheet shows a static position at a historic date and acts as an aid to consideration of loan proposition.
It is used on comparative basis of figures of different years in operation of a company. The structure of financial statement of limited liability companies should in an ideal situation be drafted at least in a format of three years balance which should be made available to a banker to enable him take a decision.
A limited liability companies financial statements has the following examples in it which includes A capital base, liquidity and profitability, a banker will have enough evidence to support his customer’s requirement.
A delay in the publication of the audited is often sign of a poor management and puts you on the question whether a customer has anything to hide.
A typical LLC financial statement requirements should include the following items,
Fixed Assets which includes
- Lands and building,
- Plants and machinery,
- Fixtures,
- fitting,
- tools and equipment,
- vehicles
Investments includes the following;
- Shares in subsidiaries
- Unquoted investment
Current assets will include the following items;
- Stock
- Working in progress
- Debtors
- Payments
- Cash/banks
Current liabilities within a year should include;
- Bank overdraft
- Creitors
- Taxes
- Dividend
The above and more should make up a standard structure of financial statement of limited liability companies.
Fixed assets – These are those assets that are acquired for use and not for sale, they are often bought as or constructed with the intention of continual use in the business concern. A typical example of a fixed asset is plant and machinery, motor vehicles, lands, equipment etc. Fixed assets are classified into three places, they are Tangible assets, intangible assets, investments.
Tangible Assets – Tangible assets are those which have physical existence, for example, land, buildings plants and machinery etc.
Intangible Assets – These are assets that not have physical existence, a good example of this is Goodwill, Patents, copy writes, trademarks etc..
Investment – Investments in other business concern with the intention of holding it on a long term basis are classified as fixed assets.
One of the most important item included in the fixed assets on the Structure of financial statement of limited liability companies is the land and building. They are permanent in nature and immovable. They are mostly accepted by banks as security when offering loans to its customers. When other assets like machinery or vehicles are offered as security to a bank for loans proposition, the bank official take s a trip to the company to ascertain the condition of the vehicle before accepting the collateral.
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