Financial Effects of Other Comprehensive Income on Smes in Medellín - Colombia

Abstract

The other comprehensive income as an equity component is a fundamental part of the financial information with the application of international accounting standards. The main objective of this article was to analyse the financial effects of other comprehensive income in SMEs in Medellín - Colombia. To meet this objective, a methodology was used that included the selection of a representative sample of 137 companies classified as SMEs from a total population of 16,553 business registers. In addition, an instrument designed to analyse the financial effects of other comprehensive income in this type of company was applied.The results of the study indicate that one of the effects of ORI on the financial statements is the conception of realised and unrealised income and expenses and their immediate and future effect on the financial life of the company, thus, ORI items represent movement in equity that do not derive from transactions with partners or shareholders; they affect the statements of changes in equity and comprehensive income. Likewise, ORI impacts financial indicators related to solvency, profitability, indebtedness as indebtedness over total assets, debt concentration, leverage indebtedness. The analysis of the results allows us to conclude that the implementation of the ORI in SMEs in Medellín brings key benefits. Among these, the improvement in transparency stands out, as it provides detailed information on items that were not traditionally included in the income statement. This increased transparency is of great importance, as it contributes significantly to building confidence among investors and stakeholders, strengthening the perception of SMEs' financial operations. The inclusion of ORI in financial reporting has a positive impact on informed decision-making by SMEs in Medellín. This is because it allows SMEs to provide investors and managers with a more complete and accurate view of their financial performance. This improved information becomes a strategy that empowers SMEs to adjust their operations as needed, thus ensuring their long-term sustainability.