No matter the size of your business or the industry you operate in, keeping track of key financial information is essential to long-term success. With the right financial information, you can make better business decisions, deal with issues early on, and lay the foundations for sustainable growth.
Financial information: Definition
Simply put, financial information is anything related to the financial activities and performance of a business. Most often, this information is collected through financial statements or reports that cover a specific aspect of a business’s finances, such as cash flow and profitability.
The general purpose of financial information is to understand a business’s overall financial position, operations, and cash flow. Some of the main uses for financial information include:
Investment decisions: Businesses can use financial information to determine if they have the necessary funds and solid financial standing to invest in new areas.
Credit decisions: Banks and lenders can use a business’s financial information to determine if a business is in a healthy enough position to receive a loan. Financial information may also sometimes be used as the basis for extending, restricting, or terminating an existing loan.
