10 characteristics of financial information
when talking about financial information Reference is made to all the data that make up the economy of a person, natural or legal, and that are expressed in a quantitative, organized and methodical way through universally established norms.
Characteristics of financial information
As part of the characteristics of financial information, the following can be highlighted:
- It is useful information in conjunction with other relevant data: Financial information, by itself, is characterized by being very useful for the economic development of a company or a natural personHowever, for said peculiarity to be of greater weight, it requires that it be supported by other relevant information, such as documentary supports of the data expressed, accounting, administrative information, etc.
- Gather data that can be very persuasive: If it has been prepared correctly and if the data provided express a fairly significant quantification, the financial information can be very useful to achieve certain purposes, such as the approval of a credit, personal or business loans, etc. Hence, it is characterized mainly by being persuasive, since just by verifying the quantitative data, if favorable, they can convince any of the optimal financial conditions of the person in question the information.
- The criteria are objective, never subjective: As it is information established under the premise of quantitative data, its foundation must be based on a objective criteria, never in subjective information or at the personal discretion of the person who executes or evaluates it, since in any given case it could not be verifiable or determinable in totally numerical terms, as financial information should be.
- It is based on real, true and 100% verifiable data: All financial information is characterized by being 100% verifiable, since it is based on information that, although it is dynamic, is supported by real, physical or electronic documents such as: account statements, checkbooks, cash, certificates, etc.
- Allows for comparative analyses: Given that financial information is characterized by being verifiable and objective, it also presents a characteristic based on comparability, that is, that the data provided in a report that reveals financial information is simple and must be prepared based on generalized criteria that facilitate the comparative dynamics with other similar data. This in order to establish evaluation criteria on financial information, payment capacities, indebtedness and other alternatives or options that a person can try to access with their excellent financial data.
- It is dynamic: Although the financial information is accurate, objective and verifiable, it must be taken into account that it can change in a matter of moments, since just by making a payment related to one of the bank accounts, the balance expressed to date in the financial information report will change. Likewise, in the case of companies, although profits are usually verified on a monthly and annual basis, the truth is that sales and purchases of supplies occur daily that change the numbers expressed.
- It is elaborated on data expressed in a simple way: It is important that financial information be prepared with simple data, based on generally accepted standard processes and of precise and immediate understanding, which facilitates the comparison tasks that wish to be executed, the evaluation of the financial state and much more; even without being a specialist in the accounting area.
- This is stable information: Although it seems contradictory to indicate that it is dynamic but stable information, the truth is that it is so, since Although it can vary in a matter of minutes, the information expressed in a financial report does not change in the past tense., being the numbers expressed at a certain moment the same, only that new operations that modify results must be added.
- It must be updated periodically: As a consequence of other characteristics, financial information is an accounting tool that must be updated from time to time, in such a way that its dynamic nature is expressed in as real time as possible and projections can be made that support accounting and administrative planning.
- It is information that requires opportunity to be useful: Finally, in line with its dynamic and periodic nature, all financial information is characterized by the fact that it must be prepared at the precise moment in which projections, requests or needs require it, in such a way that the real figures necessary or more favorable at the moment are expressed.
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ENCICLOPEDIA DE CARACTERÍSTICAS (2023) 10 characteristics of financial information, en 10caracteristicas.com. https://10caracteristicas.com/en/10-characteristics-of-financial-information/ (Consultado el: 22-09-2023)
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