Understanding a company's financial situation
- 10 May 2023
- Edited 15 May 2023
- 1 min
Financial statements provide insight into a company's financial situation and are an important resource for assessing debtor risks.
Tips on assessing finances
Verify that the company files financial statements every year and always does so in the same period (see Corporate deposits).
For legal entities entitled to a group exemption, you can request the financial statements of the group company.
If no financial statements have been filed yet, check whether there is a sole shareholder (see Group structure) who is also a legal entity, as they may have already filed financial statements.
Check whether the legal entity you are doing business with is the operating company or the holding company. Next, see who files the financial statements.
KVK uses the data from financial statements to calculate key figures, which paint a picture of a company's financial position. You can request these key figures via the financial statements.
Liquidity provides information on the company's ability to meet its obligations in the short term and shows whether the company can pay its creditors on time, for example.
Solvency indicates a company's ability to meet all long-term financial obligations.
Profitability indicates how much profit was made on the invested capital. It paints a picture of the profitability of a particular company.
There are multiple calculation modules for each key figure, which you can find in the financial statements manual (in Dutch). How to interpret annual figures and key figures depends in part on which industry a company is in. Moreover, it is important to note that figures alone never provide a guarantee about a company’s current financial position.