A financial report is a detailed account of your company’s finances over a specific period. It helps you analyze business performance, plan for the future and communicate with investors. Moreover, it is essential for ensuring legal compliance.

Creating a financial report is a time-consuming process. It requires you to collect and organize original receipts, prepare accounting vouchers and verify data accuracy. Then, you must compile all the information into a single document. To make your reports more engaging, use visuals like charts and graphs to highlight key insights. Avoid overloading them with too many details as they may overwhelm readers. Instead, focus on highlighting key metrics and ratios to provide clarity about your financial position.

Start by determining the reporting period for your financial report. You can find this in your company’s governing documents or by asking an executive. Afterward, review your ledgers and make sure all of the underlying data is accurate. Using inaccurate or incomplete data can lead to a misleading report, so double-check everything.

The next step is preparing an income statement, balance sheet and cash flow statement. The income statement is a detailed account of your company’s revenue and expenses to assess profitability. The balance sheet is a snapshot of your company’s assets (what you own), liabilities (what you owe) and equity (shareholders’ investment) at a certain point in time. The cash flow statement categorizes cash inflows and outflows to understand your liquidity and help you manage day-to-day operations.