A financial report is an essential tool for understanding where a business’s money comes from and where it goes. It reveals the state of a company’s finances, including its assets, liabilities, and equity.
Stakeholders rely on these reports to make informed investments and to determine if a company is financially stable and poised for growth potential. These reports are also key to building trust and establishing accountability between finance departments and the rest of the organization.
Whether it’s an annual financial report or a monthly or weekly finance report, the goal is to share accurate and timely data with stakeholders across the organization. The most valuable tools for this include strategic financial planning software, which accelerates and simplifies reporting, enables collaborative financial modeling, and ensures compliance with accounting standards and regulations.
The most important of all business financial reports is the balance sheet, which provides a snapshot of the relationship between what a company owns (assets) and what it owes (liabilities). This includes details like retained earnings, stock issuance, and net income adjustments.
The cash flow statement gives visibility into a company’s cash inflows and outflows, helping stakeholders understand its liquidity, allowing for better decision-making around short-term expenses, invoice financing, and long-term debt. The management’s discussion and analysis (MD&A) section of the report adds context and insight by discussing a company’s performance, risks, and future prospects. MD&As must adhere to strict accounting guidelines, but should be written in plain language to provide accessibility to a wider audience.