The accounting balance is a financial document that offers a clear and structured image of the financial situation of a company, at a certain time. This element, in short, clearly shows what the company has and how these resources are financed, either through debt or own capital.
It is a document that is prepared to provide relevant financial information to the interested parties, such as investors, creditors and the company’s administration itself and that is essential to evaluate the liquidity, solvency and capital structure of the company. In short, it offers fundamental information for informed decision making, financing and operations.
In addition, it provides a basis for financial analysis, which is essential for strategic planning and decision making. In short, the accounting balance is a vital tool that helps companies manage their resources effectively and plan their financial future.
Financial balance of a company
Facephi, a Spanish technology company specialized in the protection and verification of digital identity and quoted in BME Growth, has prepared a document that analyzes some keys to understanding how to read the accounting balance of a technological company, since these types of companies present some peculiarities that differentiate them from companies in traditional sectors.
- 1. The role played by intangibles. Technological assets in a technological company include patents, internally developed software, intellectual property and other intangibles related to technology. These assets, the result of investment in innovation and development of new products and services, are fundamental because they represent the company’s capacity to innovate and develop new products. They serve as an indicator of the company’s potential to generate future income and maintain a competitive advantage in the market, so its value can be relevant in the balance, which influences the total valuation of the company.
- 2. Research and development expenses (R&D). These are investments that the company makes in the development of new products and innovative technologies. These expenses can be capitalized and reflected as assets in the balance sheet, indicating that it is expected to generate future economic benefits. This point acts as an indicator of the company’s commitment to innovation. In the balance, these items show investment in future products and technologies, which is essential for long -term growth. In addition, understanding these expenses helps to evaluate the company’s strategy and its ability to stay competitive in a rapid evolution technological environment.
- 3. Financial flexibility to finance research. Technology companies often require financing for research and development. Analyzing liabilities helps to understand the level of leverage and financial risk of the company. A high debt load can limit the company’s capacity to invest in new opportunities, while a balanced capital structure can provide financial flexibility for future growth. In this sense, it is common for companies in the technological sector, due to their innovative profile and market disruptive, to start as small startups that are mainly financed by capital and short -term debt; Something common in the initial growth stages.
- 4. Human capital. Employee talent and skills are a vital intangible asset for technology companies. Human capital includes the knowledge, experience and creativity of employees, which are essential for innovation and development of new products. Technology companies depend largely on their human capital for innovation and the development of new products. Understanding the value of this asset is essential to evaluate the company’s ability to maintain its competitive advantage. In addition, a high rotation of employees or the lack of talent can be a risk to the company, which makes it important to monitor this aspect in the balance.
