Chapter 8: Evaluating Business Performance Through Audited Financial Statements: Considerations for Future Trends in Indigenous Finance

This chapter aims to analyze business performance related to the financial statements which were audited by the auditors. Specifically, it explores to understand the influence of audited financial statements on the financial performance considering future trends in indigenous finance. To achieve this goal, a combined approach using correlation analysis between variables was used. The analysis was carried out with secondary data for 7 years (2015–2021), while their processing was done using the Statistical Package for Social Sciences (SPSS) program, which included descriptive analysis and correlation to see the links of the factors in the model. The study found that the overall financial performance was significantly positive despite the negative cash flow from operating, investing, and financing activities. The main results include strong positive correlations between cash on hand and at banks and between accounts receivable and trade receivables. Significant positive relationships have been confirmed between stocks and stocks of commercial goods, loans, and overdrafts with the cost of goods sold – trade. In contrast, loans and overdrafts correlated negatively with the cost of goods sold – trade – but positively with the cost of goods sold – construction. These results highlight the complex interactions between financial statement variables and financial performance. Indigenous finance, including the local financial practices and resources of businesses, is likely to influence these correlations by providing region-specific knowledge and stability, thus shaping positive economic outcomes. Future studies can extend this analysis by including more firms and examining the impact of external factors beyond financial statements on financial performance and indigenous finance.