Understanding Company Financial Statements: A Guide to Key Elements

Posted on Oct 15, 2024 in Economy

Company Financial Statements

General Information

Company Name

This section displays the official name of the company as registered in its statutes.

RUT

This section displays the company’s unique tax identification number (RUT), which signifies its role in society.

Currency Type

This section indicates the currency used in the financial statements. “P” represents Chilean pesos, and “D” represents US dollars.

Type of Financial Statements

This section specifies the type of financial reporting. “I” represents individual financial statements, and “C” represents consolidated financial statements.

Assets

Total Assets

This section encompasses all assets or resources owned or controlled by the company, expected to be used or consumed within one year from the date of the financial statements. Assets are categorized as follows:

Current Assets
  • Available: Funds readily available, such as cash on hand or in bank accounts, both domestic and foreign, without restrictions. If restrictions exist, these assets should be classified under “Other Assets” and disclosed in the notes to the financial statements.
  • Term Deposits: Funds deposited in banks and financial institutions without restrictions. Deposits used to offset short-term loans should be classified under “Other Assets” and disclosed in the notes to the financial statements.
  • Marketable Securities (Net): Investments in publicly traded securities, such as stocks, bonds, and mutual funds, representing investments of available funds for current operations, net of any impairment losses.
  • Receivables from Sales (Net): Accounts receivable from the company’s core business operations, net of allowances for doubtful accounts and accrued unpaid interest.
  • Notes Receivable (Net): Accounts receivable documented through promissory notes or other similar instruments, exclusively from commercial operations, net of allowances for doubtful accounts and accrued unpaid interest.
  • Sundry Debtors (Net): Accounts receivable not related to the company’s core business operations, such as personal loans or receivables from the sale of fixed assets, net of allowances for doubtful accounts.
  • Notes and Accounts Receivable from Related Companies: Receivables from related companies, net of unearned interest, arising from commercial or non-commercial operations, with a maturity of less than one year.
  • Stocks (Net): Total inventory of goods held for sale in the ordinary course of business, expected to be sold within one year, with details provided in the notes to the financial statements.
  • Recoverable Taxes: Net tax credits, such as VAT credits, excess provisional income tax payments, and other tax credits, including those related to training expenses, donations to universities, and fixed asset purchases.
  • Prepaid Expenses: Payments made in advance for services to be received within one year, such as rent, insurance, and other prepaid services.
  • Deferred Taxes: Difference between the tax expense recognized in the income statement and the tax payable to tax authorities, arising from temporary differences between accounting and tax rules, and the existence of tax losses that can be used to reduce future tax payments.
  • Other Current Assets: Assets that do not fit into any of the above categories.
  • Leases (Net): For leasing companies, the proportion of the nominal value of lease contracts with a maturity of up to one year, net of unearned interest and deferred lease provisions.
  • Leasing Assets (Net): For leasing companies, assets purchased for lease, net of any impairment losses.
Fixed Assets
  • Land: Non-depreciable land and natural resources, such as mineral deposits and forests.
  • Buildings and Infrastructure: Buildings and other structures, including residential, commercial, and industrial properties, as well as infrastructure assets such as roads, railways, bridges, and airports.
  • Machinery and Equipment: Equipment used in production and transportation, including manufacturing equipment, agricultural machinery, and vehicles used for transporting goods or people.
  • Other Fixed Assets: Fixed assets that do not fit into any of the above categories, including fixed assets acquired through lease agreements.
  • Major Technical Appraisal Value of Fixed Assets: Increase in the value of fixed assets due to revaluation (applicable only to companies that have undergone a technical revaluation of fixed assets).
  • Accumulated Depreciation (Less): Accumulated depreciation of fixed assets, including any revaluation surplus.
Other Assets
  • Investments in Related Companies: Investments in unlisted shares or securities of related companies.
  • Investments in Other Companies: Investments in unlisted shares or securities of non-related companies.
  • Goodwill: Excess of the cost of an acquisition over the fair value of identifiable net assets acquired.
  • Negative Goodwill (Less): Excess of the fair value of identifiable net assets acquired over the cost of an acquisition.
  • Long-Term Receivables: Receivables, excluding those from related companies, with a maturity exceeding one year.
  • Notes and Accounts Receivable from Related Companies – Long Term: Long-term receivables from related companies, net of unearned interest.
  • Long-Term Deferred Taxes: Deferred tax assets or liabilities arising from temporary differences between accounting and tax rules that are expected to reverse in the long term.
  • Intangibles: Intangible assets with a finite useful life, such as patents, trademarks, and licenses.
  • Amortization (Less): Accumulated amortization of intangible assets.
  • Other: Assets that do not fit into any of the above categories.
  • Long-Term Leases (Net): For leasing companies, the proportion of the nominal value of lease contracts with a maturity exceeding one year, net of unearned interest and deferred lease provisions.

Total Assets:

The sum of all asset categories (Current Assets, Fixed Assets, and Other Assets).

Liabilities and Shareholders’ Equity

Total Current Liabilities

Obligations due within one year from the date of the financial statements. Current liabilities are categorized as follows:

  • Obligations with Banks and Financial Institutions – Short-Term: Short-term loans and other obligations to banks and financial institutions, including accrued interest.
  • Obligations with Banks and Financial Institutions – Long-Term Portion: Portion of long-term loans from banks and financial institutions due within one year, including accrued interest.
  • Obligations with the Public (Notes): Short-term debt issued to the public through notes or other securities.
  • Obligations with the Public – Short-Term Portion (Bonds): Portion of long-term bonds issued to the public due within one year, including accrued interest.
  • Long-Term Obligations Due Within One Year: Portion of long-term obligations from various creditors, including banks, financial institutions, and the public, due within one year, including accrued interest.

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