The annual financial statements are prepared in accordance with Italian law and standards (OIC). The annual financial statement presents the assets, earnings and financial situation of your company as per the balance sheet date. The annual financial statement consists of several documents, which are required in an ordinary or abbreviated form depending on the size of the company. In principle, the balance sheet and the profit and loss account are the essential components of an annual financial statement. In the case of corporations, it is also required to present notes to the financial statements. If the company is a medium-sized or large corporation, the annual financial statements must also be supplemented by a management report. All Italian corporations are obliged to file their annual accounts with the competent Chamber of Commerce and thus to make them public.

Annual income taxes are calculated based on the annual financial statements and the applicable Italian tax laws.

The annual financial statements serve as a source of information and is the starting point for the following matters, among others:

Basis for entrepreneurial decisions

The annual financial statements not only serve as a source of information for external institutions/stakeholders/personnel, but also represents the financial situation and the success of a company. Decision-making and forward planning are highly facilitated using information from the annual financial statement, balance sheet, financial statements, profit and loss statement, and the cash flow statement under certain conditions.

Basis for the cash flow statement

The cash flow statement is a component of the annual financial statements if the company needs to prepare ordinary financial statements. Liquidity is one of the most important criteria to evaluate business continuity. The purpose of the cash flow statement is to show the sources and uses of the company’s cash and cash equivalents. Basically, the cash flows are divided into three elements:

·        Cash flow from operating activities

·        Cash flow from investing activities

·        Cash flow from financing activities 

The cash flow statement is an optimal decision-making tool for the future management of the company.

Document for banks

For every financial intermediary, the annual balance sheet is an indispensable document for evaluating and analysing the performance of a company in recent years and provides an indication of its current situation. Among other things, the annual financial statements serve as a basis for the evaluation of loans and overdraft credit lines.

Basis for the tax return

The correct and truthful annual accounts are the basis for the preparation of the various tax returns. The financial statements prepared in accordance with statutory accounting principles form the basis of calculating income taxes for different types of companies. Subsequently, the corporate and business tax return is prepared and sent to the tax office on time.

Balance sheet analysis

Since the annual financial statements consist of various items and values, its quality improvement needs careful analysis.

Balance sheet analysis is understood to mean the dissection and breakdown of the annual financial statements, including the assessment of the situation and development of a company based on this. The subject of balance sheet analysis is the entire annual financial statement, consisting of the balance sheet, profit and loss statement and notes to the financial statement. Balance sheet analysis is particularly important when the company is negotiating credit, concluding contracts with suppliers or upcoming company acquisitions.

The objective of financial statement analysis is essentially to make evident those business relationships and circumstances which are not directly apparent from a reading of the annual financial statements. Various balance sheet ratios are also used for this purpose.

We will be happy to analyse your annual financial statements, discuss the figures for the past financial year on an annual basis and plan the future together with you.