The primary purpose of the Financial Statements Service is to perform the due diligence necessary to provide the client with the product the “Financial Assessment Report” which presents a close-up view of the financial position of the client. finances of the target audience selected for appraisal, which typically includes comments on asset quality, liabilities, tax risk, earnings quality, and all other financial matters of cutomer.
The report details all relevant findings and explanations for each component of the target audiences financial statements. Clients often use this report to review their decision on whether to proceed with an investment or employ sound investment strategies. This report does not make any warranties as to the Audit Report or the Review Report. This report is used by the client for the purpose of performing his or her own transaction with the selected target audience for appraisal, not being publicly disclosed to the outside world.
Verify the reliability of the financial statements:
Financial statements used: balance sheet, income statement, statement of cash flows and notes to the financial statements. However, not all enterprises have the capacity to fully prepare these financial statements. Moreover, the financial statements required by the bank will provide information to the outside, so when drafting these reports, they may be different from those prepared internally by the bank, so the level of reliability of the financial statements provided by the enterprise are not guaranteed. Although banks require audited financial statements, in reality the vast majority of financial statements submitted by businesses to banks have not been audited. Therefore, verifying the reliability of financial statements is a regular job of credit officers and they usually take the following steps:
- Carefully study the figures of the financial statements
- Use financial knowledge and analytical ability to spot suspicious points in financial statements.
- Review the notes to better understand the suspicious points in the financial statements.
- Invite customers to discuss, interview and ask for explanations about suspicious points discovered.
- Visit the business to observe and if necessary review the original accounting documents.
- Conclusion on the reliability of the financial statements provided by the enterprise.
Analyze financial statements:
- Analyze key items on financial statements
Content analysis of the change in important financial figures of the enterprise over time (usually taking data from the last 3, 4 or 5 years). The figures in these financial statements include both absolute and relative numbers (as a percentage of total assets for the balance sheet or a percentage of total sales for the income statement). import). The relative numbers more clearly reflect the significant ongoing and historical financial trends of the borrowing enterprise and enable analysts to compare with other firms or with industry averages.
- Analyze key financial parameters:
* The solvency parameters.
* Operational parameters.
* Financial leverage parameters
* Profitability parameters.
