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Finance

How to Write a Financial Report

An annual financial report can give you a very good picture of how your company is doing each year. It can be presented to banks and other lending or grant giving agencies so you can receive funding, or it can help you bring in investors through stockholders. Knowing how to write a financial report is vital to running and maintaining a profitable business.

The Financial Report

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An annual financial report is comprised of several parts. Each part looks at a different aspect of the company’s financials and, working together, gives an overall picture of the health of the business.

The Overview

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In this section, you will write up what the company does, first of all. Pretend that the reader has no knowledge of your company and needs to know. Then you need to tell them about the achievements your company has reached over the last fiscal year. You should also include how your business operates.

The CEO Report

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The business owner, the CEO, the CFO, or another high-ranking business official should write a report for this section. It should be inspirational, include a message thanking all employees for their hard work and dedication to the company, as well as let the readers know where they envision the company in a view years’ time, plus how they intend to get there.

The Balance Sheet

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This report looks as the net worth of the company. To get to this number, you will list all assets that the company owns, including cash on hand as well as all accounts receivable billed during the last fiscal year. You will also list all liabilities, including accounts payable. The amount left over after subtracting liabilities from assets is the company’s net worth.

The Income Statements

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The income statement is also known as a profit/loss statement. You will list all revenues as well as the costs incurred to get those revenues, or sales. The resulting figure after subtracting costs from revenues is the company’s net profit.

The Cash-Flow Statement

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The total amount of money that came into the company, through any means, should be compared to the amount of money that left the company, through any means. Money coming in could have been through sales, interest paid through investments, stockholder investments, loans, etc. Money going out could’ve been accounts payable, investments paid, taxes, or more. This shows the overall health of the company by showing income versus spending habits.

You can also add another section that allows you to provide explanations to anything you’ve included in the annual financial report if you feel it necessary. If something happened to reduce sales in a certain quarter or if a large chunk of money was spent during the first half of the fiscal year and you have valid reasons for this, then an explanation might be necessary. However, financial reports are necessary for every business to show anyone involved in making decisions for or about the company so they can see the overall health of that company.

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