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Structure Basic Financial Statements

Valentina Iglesias Tovar ID 100115852

Yiseth Palacios Hurtado ID 100061520
Juan David Bohórquez Casas ID 100137931
Sofia Hernandez Moreno ID 100098588

Faculty of Business Sciences, Ibero-American University Corporation

NRC 1939: Financial Analysis

Professor: Carlos Silva Rojas

February 2023
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Structure Basic Financial Statements

1. What is initial financial position statement (Balance Sheet)?

The beginning balance sheet is the representation of a company's financial reality at the time

it starts a company from scratch.

In this the assets, liabilities and patrimonies with which a company starts will be reflected, the

assets that the company has, the obligations that will be had for the start-up and the

contributions of the partners for the constitution of the company will be reflected.

2. What is an opening statement of financial position (Balance Sheet)?

This type of balance is made when a new accounting period begins, in which the balances of

the previous year or period are reflected.

The opening balance sheet provides benefits such as having a general image of the financial

and equity situation at the beginning of each accounting period, this allows a first comparison

between years and evidence of the development of the company annually.

This balance provides greater precision in the data compared to the other balances since it is

presented after making the respective adjustments.

3. What and what are the assets of companies?

The assets of a company are everything it has to carry out its main activity, whether it is a

product or a service. These can be physical or intangible. Within the physical assets we can find

movable assets that are those that can be moved without losing their original characteristics

such as vehicles, desks, stationery; On the other hand, we find real estate that is mainly land,

buildings, warehouses.
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4. What and what are the rights of companies?

Business law serves to guide the activities of organizations, since the proper functioning of

these depends on compliance with regulations and internal regulations.

The activity of companies is varied and has become the fundamental engine of the economy

of Colombia and the world. However, the success of the development of a company is linked to

regulatory compliance, or at least this saves inconveniences in its growth, so it is essential to

have knowledge of business law.

It covers several branches of law: Commercial, corporate, exchange, bankruptcy, stock

market, economic. He works within private, public and social law.(INTERNET, Business Law,

2021)

5. What and what are the obligations of companies?

In the duties or obligations of the companies there are different areas such as the payment of

taxes, maintaining an environment and work space for workers, an important factor that little by

little is gaining more strength is environmental responsibility, complying with what they expose

in advertising and agreed in contracts, follow state rules and regulations, etc.

6. What is financial balance?

Financial equilibrium occurs when a company is in a position to meet all its payment

commitments, both in the short term (liquidity) and long-term (solvency), maintaining its

normal cycle of operations.

Possessliquidityit means having a certain amount of cash at a given time and, therefore,

having the ability to meet short-term payments. ThesolvencyOn the other hand, it does not

require this immediate availability of cash. It is enough to have assets capable of generating

sufficient funds to face future debts, long-term payments.(Yirepa-Economy and Finance, 2021)

7. What are Operating Income?

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They are the income that a natural or legal person has that is directly related to their main

activity. This information allows obtaining other important data such as the profitability that is

given after calculating and deducting the operational expenses and the cost of the merchandise

(inventory), this information is quite important since it is what allows having and presenting

financial data on the development and evolution of the company.

8. What is Gross Profit?

Gross profit is the profit obtained from the sale of some type of product, where the costs

associated with its production are first subtracted.

It is the profit that is obtained, after the direct and indirect costs of manufacturing and

launching to the market are discounted.

Gross profit is important since in this way companies can validate and know if they can really

cover their expenses and obtain economic benefits after the sales made.

9. What is Operating profit?

Operating profit is the money left over from revenues after activity costs have been

subtracted and measures a company's performance in terms of revenues and expenses.

One of the most important figures of a business is the operating profit, which indicates how

much money a company has left after covering all its expenses.

It is a good indicator of how well the company manages its assets, and is often used to

compare a company with others in the same industry.(Global66, 2022)

10. What is profit before taxes?

The profit before taxes is the profit purified of all operational and financial concepts, which

only needs the application of taxes to proceed to be distributed.

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When the profit of a company is determined, the last concept that is applied is that of taxes,

since the taxation is made on the profit (tax liquid subtraction) that a company actually obtains,

profit that is affected by any charge coming according to the tax laws.(Management.com, 2023)

11. What is Net Income?

The liquid profit is that which, in accordance with article 451 of the Commercial Code, results

once the deductions stated have been made. By what is understood as the profit obtained by

subtracting and adding the operating profit, non-operating expenses and income, taxes and the

legal reserve. It is the utility that remains to be distributed to the partners of the company, which

is why it is also called net.(Company, 2018)

12. What is net profit?

The net profit is a way of calculating the results of the companies, where the total result of a

company is taken into account, this is achieved by subtracting the net income, the total

expenses according to the activity of the company.

Only the main activity of a company is taken into account, where amortization, interest and

taxes are not taken into account.

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Bibliography
Yirepa-Economy and Finance. (August 2021). Retrieved from https://yirepa.es/el-equilibrio
financiero.html

Management.com. (2023). Earnings before Taxes. https://www.gerencie.com/utilidad-antes-de-

taxes.html.

Global66. (2022). Operational utility. https://global66.com/blog/utilidad-operacional/.

INTERNET, UL (2021). Business Law. https://colombia.unir.net/actualidad-unir/derecho-empresarial/.

Company, ME (2018). Liquid Utility. https://www.milexamples.com/company/ejemplo-de-utilidad-

liquida-del-ejercicio-o-utilidad-neta.html.