Financial reports track, organize, and analyze a company’s cash flow to give insight into where money is coming from and where it is going. They’re essential for attracting investment, establishing creditworthiness with creditors, and creating budgets for future spending. Financial reports can also help companies identify and seize new business opportunities by showing that their revenues are higher than their expenses.
Financial report examples include the balance sheet, income statement, and cash flow statement. Each of these documents offers a snapshot of a company’s financial health by listing the relationship between a company’s assets (cash, accounts receivable, inventory, marketable securities, and more), liabilities (accounts payable, short-term loans, long-term debt, and more), and shareholders’ equity.
A comprehensive financial report should also include management’s perspective on the company’s liquidity position, capital resources, results of operations, and future outlook. It should avoid jargon and use plain language to ensure that the report is accessible to a wide audience.
To create an accurate financial report, it’s important to verify that all data and calculations are correct. Then, have someone else review the document to catch any errors or inconsistencies. Finally, it’s critical to update the report as soon as possible after the end of a reporting period, as the most up-to-date information is more valuable than older information. Using a tool like Sage Expense Management to automatically submit receipts in real time via text or everyday apps can reduce the burden of manual expense reporting, allowing employees to focus more on creating quality financial reports.