A financial report provides a detailed snapshot of a business’s finances over a set period, such as a quarter or year. It includes a number of essential sections, including the income statement, balance sheet, cash flow statement and statement of shareholders’ equity. A well-prepared financial report gives external stakeholders a clear picture of your company’s profitability, performance and growth trajectory and allows you to stay compliant with regulations.
Financial reports are the primary source of information for investors, creditors and lenders. They help them make informed decisions about whether or not to invest in your company, or lend you money. To attract investment, it’s important to present accurate and up-to-date financial statements that demonstrate your profitability and cash flow.
Your internal stakeholders, such as your management team and board of directors, also need access to your financial report to review the company’s performance, direction and growth potential. This is why it’s essential to create a clear and concise report, while leveraging visuals and graphics strategically to improve readability.
Having all of your key data in one document makes it easier to complete tax filings and reduces the likelihood of errors. It also means that you can quickly identify areas of your business where improvement or change is needed. This insight will empower you to establish SMART business goals and drive profitable growth. For example, if your profits are high but you haven’t been able to turn over the revenue to cover operating expenses and debts, then this is an indication that it may be time to seek new investment or financing opportunities.