There are various financial reports a company can create to help measure the performance of their company. Reporting that will help analyze costs, profitability, actual to budget analysis, future projections, growth, profits & losses, and a statement of financial position. Each report will capture the information for a selected period of time.
Two widely used reports are the Income Statement and the Balance Sheet. The Income Statement provides Revenue and Expense information for a specific period of time. Some companies rely on monthly Income Statements while others review quarterly or annually. How closely you want to monitor your performance will determine how often you want to run an Income Statement. Before generating an Income Statement from your financial software ensure all revenue and expense verifications have been performed for the period selected. Your Income Statements are only as valid as the information that has been entered.
The Balance Sheet is a statement of financial position for a specific period of time. The Balance sheet reports your assets, liabilities, income for the period, and owner’s equity. At a glance you can see the value of your assets like inventory, cash, accounts receivable, your liabilities like accounts payable, loan balances, taxes owing, and the amount of owner’s equity – your investment in the company.
Cash Flow Reporting will help you determine your cash requirements for a selected period of time. It will help you manage your cash in and your cash out. You can set up a daily, weekly, monthly, or annual cash flow report. Your cash flow report may be generated from your accounting software or you can create a Cash Flow Report with a spreadsheet program.
Budgets are another well used report for financial management. Setting up a budget can keep you focused on what is important. A budget can alert you when unexpected costs arise or when there’s a change in sales. When your timeline for projected sales or expenses change you can adjust your budget accordingly. Understanding why you are not performing within your budget will help you understand where you need to make changes in your company performance or with your budget expectations.
Notes to your financial statements will help explain the variances from period to period as well as any reasons for changes. Notes explaining large increases in costs or sales decline due to new competitors or tax law changes are useful in accessing the overall company dynamics. Notes provide answers immediately to the readers of financial statements giving them confidence in understanding the numbers representing your business.
There are various financial reports a company can create to help measure the performance of their company. Reporting that will help analyze costs, profitability, actual to budget analysis, future projections, growth, profits