Simply put:
The cash flow statement reflects the changes of a company's cash in a certain period of time, which is divided into three categories according to the purpose: operation, investment and financing. The cash flow statement can be used to analyze whether the company has enough cash to meet the short-term expenses.
The balance sheet describes the company's assets, including cash, tangible and intangible assets, liabilities, accounts receivable, shareholder investment, retained earnings, etc. The balance sheet reflects the basic financial situation of the company.
The income statement describes the data about the company's loss or profit, which shows the company's profitability in a certain period, also known as the income statement.
If the company's cash balance forecast is negative in a month, managers should be careful, because the company may not be able to pay suppliers' fees, rents or even employees' wages in that month, which will have very serious consequences.
Financial statements are like traffic lights on the road, "green light" means that the company's current decision-making and implementation are unimpeded; The "yellow light" requires managers to be vigilant about certain things; When the "red light" lights up, it means that there are major problems in the company's operation.
Therefore, only when managers understand finance can they firmly hold the "steering wheel" of the company's progress.
After understanding the three financial statements, managers should further master the methods of analyzing other financial data statements, so as to manage the use of budgets and funds, conduct cost accounting and control, allocate and control expenses, clarify accounts receivable and accounts payable, and formulate strategies for welfare and bonuses.
legal ground
The Company Law stipulates that the financial department of the people's government at or above the county level shall order the company to make up the amount that should be withdrawn, and may impose a fine of less than 200,000 yuan on the company. If a company engages in business activities unrelated to liquidation during the liquidation period, it shall be given a warning by the company registration authority and its illegal income shall be confiscated.
Chapter XII Legal Liability Article 199 Whoever, in violation of the provisions of this Law, falsely reports the registered capital, submits false materials or conceals important facts by other deceptive means to obtain company registration, shall be ordered by the company registration authority to make corrections, and a fine of more than 5% 15% of the company's registered capital shall be imposed on the company that falsely reports the registered capital; Those who submit false materials or conceal important facts by other fraudulent means shall be fined between 50,000 yuan and 500,000 yuan; If the circumstances are serious, the company registration or business license shall be revoked.
Article 200 Where the promoters and shareholders of a company make false capital contributions and fail to deliver the monetary or non-monetary property contributions on time, the company registration authority shall order them to make corrections and impose a fine of more than 5% 15% of the amount of false capital contributions.
Article 201 Where the promoters and shareholders of a company withdraw their capital contribution after the establishment of the company, the company registration authority shall order them to make corrections and impose a fine of more than 5% 15% of the withdrawn capital contribution.