Financial Translations:
The Most Critical Terms in Financial Statements

Those who work with balance sheets, annual reports and international financial documents know it: English terms from the sector are everywhere, even in documents originally written in Italian or other languages. But when it comes to translating them officially — for a filing, a corporate transaction or a foreign audit — the choice of the correct term is never neutral.

Terminology errors in a translated balance sheet can generate accounting ambiguities, requests for clarification from auditors, or misunderstandings in due diligence processes. Below are the most common cases we handle.

The most critical terms

Equity. Common incorrect translation: "equità". Correct translation in accounting context: shareholders' equity or net assets. In some specific contexts it may refer to share capital or proprietors' capital, but the reference term in balance sheets prepared under Italian accounting standards is patrimonio netto (net equity).

Goodwill. Often left in English even in Italian documents, the term has an official correspondence: goodwill or avviamento (going concern value). Under IAS/IFRS the English term is sometimes maintained, but in documents to be filed with Italian bodies the Italian equivalent is preferred.

Accrual. One of the most misunderstood terms. In the context of the accrual accounting principle, the translation refers to the accrual basis of accounting. Accruals as balance sheet items are typically translated as accrued liabilities and deferred income.

Revenue vs. Turnover vs. Sales. Three terms that in English have different nuances but in Italian all converge on ricavi (revenues) or fatturato (turnover), with distinctions that depend on context and the chart of accounts in use.

Impairment. Translation: impairment loss or write-down. The term impairment test is often maintained in English, but disambiguation is necessary when dealing with official documents.

EBITDA, EBIT, EBT. Acronyms almost universally used in English even outside English-speaking countries, but which in official translations for non-English-speaking countries require explanation or translation: earnings before interest, taxes, depreciation and amortisation, earnings before interest and taxes, earnings before tax.

The risk of machine translation in financial documents

Machine translation systems have no access to the company's chart of accounts, the accounting standards applied, or the legal and tax context of the document. They produce plausible but terminologically imprecise output. In a certified balance sheet or an investor report, terminological imprecision is a risk no company can afford.

Our specialist financial translators work with glossaries built around your sector and, where necessary, in coordination with your auditing firm. Contact us for an assessment of your document.