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Step 1
Develop an income statement and a balance sheet by collecting records of expenses and income for the last year or three years, as required. Collect information on all assets and liabilities--both short-term and long-term.
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Step 2
Include income from work or business for the past 12 months on line one. Include income received from bonds, notes and dividends from stocks on line two. On line three, include realized gains or losses from stock trading. Use separate lines for gains and losses on other business activities. Add other lines for earned and unearned income not in one of the categories discussed above. Total the sum of the lines on a line titled Income.
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Step 3
Note all expenses including interest, loans, housing and housing maintenance, appliances, cars, furnishings, taxes and other miscellaneous items. Total all expenses for the last 12 months on a line titled Expenses. Subtract Expenses from Income and label the result Net Income. Loan appraisers will use the gross income to better understand your finances. They will also measure the sources of your income and expenses to see if they are appropriate for others in the same income category.
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Step 4
Collect all assets and divide them into short-term and long-term assets. In both categories, start with the most liquid asset and move to the least liquid. Add the two categories together and label the result Total Assets.
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Step 5
Follow the same procedure for liabilities as in step 4. Total the short-term and long-term liabilities together and label them as Total Liabilities. Subtract the Total Liabilities from the Total Assets. The result is Net Worth. This is the value of your total assets after paying all debts. Check your work by making sure that the sum of Total Assets is equal to the sum of Total Liabilities and Net Worth. The Cash Flow and Net Worth statement comprises a short or minifinancial statement.
