How to Write a Financial Report

Financial reports indicate the financial health of a company.

Financial reports are assessments that help identify the current financial status of a company or organization as of the latest closed accounting period. A financial report may cover a short period of time, such as the most recent calendar month, or time frames of up to a year. Several basic elements are included in the preparation of an effective financial report.

Things You'll Need

• Accounts receivable information
• Accounts payable information
• List of assets
• List of liabilities

Instructions

1. Gather the financial records together. This will include all information about current liabilities that were not paid during the period and any receivables that were not received as of the cut-off date for the report. All known assets, including property and other holdings, also should be compiled into a simple listing.

2. Begin compiling the sections for the financial report. This includes a section that details each type of financial component. A basic financial report includes a section for assets and one for liabilities. In some instances, these two sections can be broken down into more detail. For example, assets can be divided into subsections to show property, miscellaneous holdings and outstanding receivables.

3. Compare assets to liabilities. After detailing the income and expenses, the next step is to show how they compare. Deduct the expenses from the income to determine the current amount of net income for the period. Ideally, the organization generated and collected enough revenue to offset expenses for the period. If not, this final figure will show as a negative amount.

4. Relate the net income figure to the other assets of the company. If the net income was a negative figure, the amount will be deducted from the worth of other assets. If the net income was positive, it is added to the worth of the assets. The result will reflect the current overall value of the company.

5. Close with a section of points that require special attention. For example, if expenses exceeded income for the period cited, make note of where the expenses may be addressed more effectively and result in a positive rather than negative figure. Also make note of any areas that seem to be out of line with company goals. This will provide managers and others with ideas for improving the bottom line.

Tips & Warnings

• A financial report does not have to be complicated to read. Simple, straightforward figures related to all applicable components are all that's needed. Backup documentation can be consulted if there is a desire to delve into greater detail about a given line item in the report.

• The purpose of the financial report is to show the true financial condition of the company. Attempting to massage the results to make the company appear more profitable than it really is can lead to serious problems later.

Resources

• Read this Article in Spanish
• Entrepreneur.com: Financial Analysis
• SCORE.org: Template Gallery - Finance Templates