A financial report is a snapshot of the state of your business’s finances over a specific period. It includes important data such as your income statement, balance sheet, cash flow statement and statement of changes in equity. Those statements allow you to assess the company’s past performance, potential future trajectory and manage risks. Moreover, they are essential to legal compliance for public companies.
The best way to get the most value out of your financial reports is to ensure they’re as accurate and comprehensive as possible. That means collecting the correct data from the start, and not leaving anything out. This requires the right systems, like Planful, to accelerate, streamline and automate the entire process. These systems can integrate with operational, accounting and other business systems, simplify financial data analysis with user-friendly interfaces and visualizations, and help you meet regulatory standards.
Before you begin preparing your financial report, decide how long of a reporting period to use. This will depend on whether you want to assess short-term changes or analyze longer trends. Then, gather all of your financial information for that time frame, including sales invoices, purchase orders, expense receipts, bank statements and payroll records. You’ll also need to reconcile those data sets against your trial balance, which lists the beginning and ending accounts in your general ledger at a particular point in time.
Once you have all your data ready, it’s time to put together the main content of your report. This part should include the income statement, which details your company’s revenues and expenses over a certain period, as well as the profit or loss that you made. The balance sheet is a list of all your business’s assets and liabilities, while the cash flow statement shows inflows and outflows of money throughout the company, such as from operating activities, investing activities and financing activities. Finally, the statement of changes in equity outlines shifts in the company’s shareholders’ capital, such as through dividend payments and share issuances.