Annual Financial Statement

What Does an Annual Financial Statement Include?

An annual financial statement typically consists of several components that, together, provide a detailed overview of the company’s financial situation. The specific content depends on the company’s accounting classification, but the most common elements are:

• Income Statement
  Shows the company’s revenue and expenses during the financial year. This reveals whether the company is operating at a profit or a loss.

• Balance Sheet
  Provides a snapshot of the company’s financial position at a specific point in time – i.e., what assets (e.g. cash, inventory, property) the company owns and what liabilities (debts and obligations) it owes.

• Notes
  Supplementary information explaining how key figures are calculated, as well as details on the accounting principles applied.

• Management Review (required for larger companies – Class C and D)
  A statement from the management describing the company’s development, risks, expectations for the future, and any special circumstances.

• Auditor’s Report (if the company is subject to audit)
  A declaration from a certified auditor confirming that the financial statement has been reviewed and meets applicable accounting regulations and standards.

Why Is the Annual Financial Statement Important?

The annual financial statement is not just a legal obligation – it’s also a crucial management tool that gives you a solid financial overview and supports better decision-making for your business.

It tells you:

• How your company is performing financially – both on the bottom line and in the balance sheet.

• Whether your operations are generating profit or loss, and where the money is being earned (or lost).

• Whether your company has a healthy financial structure and balance between assets and liabilities.

• How your assets – such as inventory and fixed assets – contribute to the company’s overall value.

• Whether you are ready to invest in growth, seek external financing, or optimize existing processes.

In other words, it’s an invaluable tool for future planning, ensuring a stable operation, and demonstrating that your company is under control.

With a warehouse management system like Rackbeat, your inventory data is automatically updated and documented – making it significantly easier to generate accurate accounting figures that reflect reality.

Who Is Required to Prepare an Annual Financial Statement?

• Companies (ApS, A/S, etc.) are legally obligated to prepare and submit an annual financial statement to the relevant authorities.

• Sole proprietorships and personally owned small businesses are often not required to submit a formal statement, but many choose to prepare an internal one anyway – to maintain financial oversight.

What Does Inventory Management Have to Do with the Annual Financial Statement?

At first glance, the annual financial statement may seem far removed from your daily warehouse operations – but in reality, inventory management plays a key role in both the income statement and the balance sheet.

For example, if you hold a large amount of stock, you’re tying up capital that could be used elsewhere in the business. Your inventory level also affects the cost of goods sold (COGS) in the income statement – and thereby your profitability.

With a digital inventory management system like Rackbeat, you get real-time visibility into stock levels, inventory turnover, and purchasing management – all of which are directly relevant when you or your accountant prepare the annual financial statement. The more accurate your inventory data, the more reliable your financial reporting becomes. This can save you both time and money in the accounting process.

Get Tips and Insights Straight to Your Inbox

Want to stay updated on how to strengthen your business with smarter inventory management, improved workflows, and better financial control?

Sign up for Rackbeat’s monthly newsletter and get insights, guides, and tips delivered straight to your inbox. It’s free, easy, and full of actionable value you can use right away: