How to Make a Financial Statement in Google Sheets
Financial statements are written records prepared by the company's accounting management to convey the financial performance of a company and its business activities, thereby making it an important element in your business plan. Financial statements are comprised of four basic reports—balance sheet, income statement, statement of cash flows, and statement of retained earnings. These documents are usually prepared by professional accountants or certified public accountants, however, with the help of computer software, you can now prepare your own financial statements. Here are some guidelines that you can use in making a financial statement.
1. Company Information
Start with the header. You have to specify the type of financial statement that you are working on—whether it is a balance sheet, income statement, cash flow statement, or statement of retained earnings. Beneath the title should be the fiscal year, company name, business address, company contact number, and company website. The aforementioned details make your document formal, plus it will make it easier for your audience, which are your business partners and investors, to contact you if they found anomalies in your financial statement.
2. Determine your Assets
Assets are the things that a company owns that have value—accounts receivables, cash and cash equivalents, inventory, prepaid expenses, and short-term investments. Account receivables are the amount of money that are yet to be paid by the customers. Meanwhile, cash and cash equivalents are highly liquid investments which may include money market accounts, treasury bills, and commercial papers. The company's assets can increase your business' value, facilitate the running of your business, and generates revenue. If you are making an annual financial statement, you can make a table, wherein each column has designated months.
3. Record your Liabilities
In order to make a successful financial statement, you have to indicate all your liabilities—both current and long-term liabilities. Current liabilities may include accounts payable, short-term loans, income taxes payable, accrued salaries and wages, unearned revenue, and current portion of long-term debt. Meanwhile, long-term liabilities may include the company's long-term debt, deferred income tax, long-term loans payable, and etc. Make sure that you record all your liabilities because they will play an important role in determining the financial health of your company. Moreover, you can separate the liabilities in your financial statement according to its category—if it is short-term or long-term.
4. Determine Your Total Equity
The Shareholder's equity is sometimes called as capital or net worth. It is the total amount of money left if a company sell all of its assets and pay all of its liabilities. It may include owner's investment and retained earnings.
5. Common Financial Ratios
Financial ratios can provide small business owners and managers a tool to measure their progress against overall industry, a certain competitor, or predetermined internal goals. This part of your financial plan includes debt ratio, current ration, working capital, assets-to-equity ratio, and debt-to-equity ratio. The aforementioned ratios are used by business analysts, investors, and bankers in assessing the company's financial status.
6. Use Google Sheets
Google Sheets is the perfect avenue for you to put everything into pieces considering that you will be doing calculations, plus you are going to make tables. The aforementioned software program is available for free with no installation required. All you need to have in order to access Google Sheets are the following: an Internet connection, a Google account, and a web browser.