Relevance of Financial Statements Information from SMEs Perspective

Abstract

This paper considers the information presented in the financial statement by small and medium sized enterprises (SMEs) and its role in business decisions. In particular, attention is focused on data presented in abridge financial statements and the lack of reliable information in this documents, which comprises a trustworthy financial analysis in case of micro and small business. Financial statements allow internal and external users to draw up conclusions about the financial position and performance of the business, generating information about cash flows, costs, revenues, and profit margins. For external users, financial statements are also the only source of information. In this regard, some of the current limitations of the information presented in the abridge form of financial statements will be detailed in the current paper. Furthermore, recommendation for improving the current situation will be proposed. This paper has been drawn up, using the official statistical data, the legal framework and own reflection of the author. UDC: 334.012.6:657.37(478); JEL: G30