Financial reports are formal paper documents that mustn't be taken lightly even with the help of our quality templates. This applies even to a young and small business. For that reason, we have gathered a few tips to guide you on how to write a financial report.
1. Prepare, Review, and Gather Any Missing Info
Decide the time frame of your report, whether it's weekly, monthly, quarterly, or an annual report. The next thing you should do is review and analyze your ledger comprehensively. Do your best to pinpoint the cause of some discrepancies and take note of them. Try to detect some financial transactions that weren't recorded in the ledger and note them as well.
2. Prepare Your Balance Sheet
A financial report is basically irrelevant without a balance sheet. It's where the readers will see the detailed breakdown of all the financial transactions. The first step you must do is to format the balance sheet appropriately to give it an organized look. Make sure that it's outlined in a way that the readers can pinpoint where each variable belongs. The next steps you must perform is to list down all assets, liabilities, and sources of equity. Next, add the total amount of the liabilities and equity, and then add them with the assets' total amount. If both their total amounts match, then you can safely say that there are no discrepancies with your balance sheet.
3. Prepare Your Income Statement
Formulate your income statement based on the results of your balance sheet. You must highlight the key variables from the balance sheet that had the greatest impacts on the current financial status.
Important fact: An educational article in accountingtools.com states that the income statement is majorly the most essential part of a financial report. It's where everything about the current financial situation is unraveled, such as the number of expenses, sales, profits and losses statement.
4. Set Up Your Statement of Cash Flows
Start your statement of cash flow analysis by listing your company's current operating activities. Then afterward, list the investment activities corresponding with your balance sheet. And lastly, you must address all the financial transactions corresponding with your balance sheet's list of equities.
5. Review Everything
Before submitting the financial report to your superiors and company leaders, invest time to review it from start to finish. Double-check and proofread if every summary and statement you've encoded in your financial report adds up accordingly, most especially on your balance sheet and income statement.