Financial abstracts are an important aspect of the due diligence process, helping identify potential credit issues or bankruptcy concerns. Some types of information are arguably more valuable than others; including too much information can dilute the effectiveness of the deliverable. Abstracts, by design, should be concise. The goal with a financial abstract is to provide the key details readers need to know in order to make informed decisions.
This article highlights some of the most critical information to include in a financial abstract.
- Credit reports. A financial abstract should summarize information provided in credit reports, including potentially negative information, numbers of open accounts, outstanding balances, and available credit.
- Financial statements. Including information gleaned from the organization’s balance sheet can provide a window into the company’s ability to meet long-term obligations. For abstract purposes, highlight key details from income statements, shareholder equity reports, and cash flow statements.
- Tax information. Available tax information can also provide a picture of the company’s ability to meet its financial obligations. Summarize the organization’s tax status, including whether outstanding taxes are still owed to federal, state, and/or local tax authorities.
- Loan details. Details about existing outstanding loans or credit agreements can create a more complete picture of the company’s current financial status. For each obligation, include the borrower, guarantor, lender, original loan amount, outstanding balance, maturity date, amortization schedule, and terms.
- Section references. If the abstract includes a summary of a particular section of a loan document, financial statement, or other document, include a section reference or refer to the page where the original provision is located.
When preparing financial abstracts, keep the audience in mind. Abstracts should avoid legal jargon and be presented in a simple, straightforward manner.
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Mr. Reyes graduated with honors from the Ateneo de Manila University, where he received the Procter and Gamble Student Excellence Award. He obtained his Juris Doctor degree from the Ateneo de Manila School of Law. During law school, Mr. Reyes was part of the Philippine delegation to the Willem C. Vis International Commercial Arbitration Moot held in Vienna, Austria. He was also a member of the Ateneo Society of International Law and the St. Thomas More Debate Society. He completed his internship at the Public Attorney’s Office. He wrote a thesis entitled: “To Kill A White Elephant: An Analysis of the Fiduciary Exception to the Corporate Attorney-Client Privilege”. Mr. Reyes is admitted to practice law in the Philippines and the State of New York.
Ms. Lardizabal-Manzano is a graduate of San Sebastian College-Recoletos, where she earned her B.A. in Political Science. In 2003, she received her law degree from Lyceum of the Philippines and was admitted to practice law in 2004.
Matthew Hersh earned a B.A. in Political Science from Columbia University in 1990 and graduated cum laude from Georgetown University Law Center in 1999. He also holds a master’s degree in international relations from the Georgetown University School of Foreign Service.
Cap. Avi Levak (Res. IDF) graduated from from Israel’s prestigious Ben-Gurion University of the Negev with a Bachelor of Science in Computer Science and Mathematics. He is also a Leadership and Communication coach trained in TuT coaching by Alon gal in Israel. Avi specializes in high-level, in-depth analysis of business and client needs, within systems and software strategy and architecture.
Ms. Tyler graduated cum laude from Georgetown University and received her law degree, cum laude, from Georgetown University Law Center. During law school, she interned at the United Nations Economic Commission for Europe. She also worked on The Tax Lawyer journal and was a member of the award-winning Barristers’ Council Mock Trial Team. Ms. Tyler is admitted to practice law in the State of California and the District of Columbia.
Ms. Cruz-Anonuevo graduated cum laude and top nine in her batch from Miriam College with a degree of Bachelor of Arts in InternationalStudies. She obtained her Juris Doctor degree from Ateneo de Manila University School of Law in Rockwell. During law school, she interned in Rivera, Santos, Maranan & Associates. She was also part of Ateneo’s Labor Law Bar Operations. She wrote her thesis on, “Stealing Privacy: Limitations on Media’s Photographic Invasion.,” Ms. Cruz-Anonuevo is admitted to practice law in the Philippines.
Ms. Aquino-Batallones obtained a Bachelor of Arts degree in Development Studies (with Minors in Global Politics and Hispanic Studies) from the Ateneo de Manila University. In 2011, she received her Juris Doctor degree from Ateneo de Manila University School of Law. During law school, she interned at Romulo Mabanta Buenaventura Sayoc & de los Angeles then became an intern of Ateneo Legal Services Center’s Clinical Legal Education Program.
Mr. De Guzman graduated from San Beda College with a degree of Bachelor of Arts Major in Economics and received his law degree from San Beda College of Law. He is multilingual and is fluent in three languages: Chinese, Filipino, and English. He was admitted to the Philippine Bar in 2003.