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Company Financial Statements: Identifying Signs of Business Failure

Understanding company financial statements

CEO of CreditSource and financial analyst expert Shavantha Mallawa, along with CreditorWatch‘s CEO Patrick Coghlan, presented a webinar on company financials and how to spot the signs of business failure.

If you joined us, you would have seen how easy it is to understand company financials and use them to gain insights into the financial health of a customer or supplier.

Missed the session? Watch the webinar below and read on for an overview on company financial statements, frequently asked questions and a guide on how to order a Financial Risk Assessment from CreditorWatch.

Watch the webinar

What can I use company financials for?

Appearances aren’t everything. 

An organisation’s financial data reveals hidden insights into how a company is really performing. You can deep dive into a business and find out what’s going on internally, and this helps you make the most informed decision before you approve a large credit limit or sign a contract with a critical supplier.

What are the key areas within a company’s financial statement?

  • Profit and loss statement: a record of the revenue generated and expenses occurred by a company over a set period, for example, 12 months.
  • Balance sheet: a snapshot of what the company owns and what is owed by a specific date.

A guide to understanding company financials

There are four angles you can use to assess a company’s financial position:

  • Revenue: Use this information to identify trends in a company’s revenue and prominent revenue sources.
  • Profitability: A company needs to consistently make a profit to continue to trade and secure financing.
  • Solvency: Can the company meet its financial debts and obligations to continue to operate in the future?
  • Liquidity: This demonstrates how easily a company can pay off its near-term liabilities.

CreditorWatch’s Financial Risk Assessment

Understanding a company’s financial risk isn’t nearly as daunting as it seems. As a CreditorWatch customer, you can order a Financial Risk Assessment to gain a comprehensive look into a customer or supplier’s financial health.

The report is easy to understand and includes tables, graphs and succinct expert analysis so you can do your due diligence, even if you don’t have financial experience.

Learn more

How to order a Financial Risk Assessment

1. Click on ‘Financial Risk Assessment’ from the right-hand side task bar on any business’ credit report within CreditorWatch.

2. Customise your assessment with the options below and click ‘Purchase’. 

You can choose from a standard Financial Risk Assessment (FRA) or a FRA with analysis, over a two or three year period.

This second option will offer a tailored analysis of a company’s financial performance and expert recommendations on how your business should proceed. This commentary makes it easier for anyone to understand a company’s financials, even if you don’t have a financial background.

Where can I find a company’s financial statements?

You can usually obtain a company’s financial records from ASIC.

If you’re dealing with a private company or the company doesn’t publish their financial information on ASIC, click ‘Self Provided Financial’. CreditorWatch can help you obtain the financials from the entity directly.

Does a client know if I’ve ordered a Financial Risk Assessment on their business?

If you take a company’s financial data from ASIC or ASX, your client won’t know that you’ve ordered a FRA. If you or CreditorWatch contact the business directly, they will know, but generally will be happy to comply. If they’re not, it could be a sign they have something to hide.

What does a Financial Risk Assessment look like?

Click the button below to download a sample of the two types of financial risk assessment reports we offer.

If you have any questions, please contact our friendly support team (Monday-Friday) on 1300 50 13 12 or email us at admin@creditorwatch.com.au.

Download a sample FRA