A financial report summarizes the performance of a company’s revenue, expenses, assets, liabilities and equity for a specific reporting period. Creating clear and engaging financial reports can help stakeholders gain a fuller understanding of your business’s health, profitability and growth.
Developing a framework to guide your report creation will keep your financial reports organized and easy to read. Start by identifying what types of information you need to include in your report, then create a reporting template that will be consistent across periods. This will help all your stakeholders understand and compare performance over time. For example, many FMCG companies standardize the way they present sales, inventory and advertising costs on their profit and loss statements.
An income statement lists the gross revenue a company earned during a reporting period, minus any operating costs to find net income. It also includes the value of any cash that a company has, as well as any amounts that can be converted to cash within a year (known as “cash equivalents”). A balance sheet is a snapshot of a company’s assets, liabilities and shareholders’ equity at the end of a reporting period. It outlines the company’s net worth, including details like retained earnings, dividend payments and stock issuances.
A statement of cash flows reports the inflow and outflow of money over a period, typically covering operations, investments and financing activities. This is important for ensuring a company has enough cash to meet its debt obligations, and investors use it to assess a company’s liquidity and capital structure.