Financial reporting is a way for businesses to communicate their financial health with internal and external stakeholders. It’s a legal requirement for public companies and an important tool to help them stay compliant with accounting standards set by tax authorities. Without proper financial reporting, a business can quickly run into major issues with regulators and investors. In this article, we’ll dive into what a financial report is and how to create one.
Financial reports are detailed snapshots of a company’s finances over a given period, such as a quarter or year. They contain a variety of data points, including the company’s balance sheet, income statement, cash flow statement and statement of changes in equity. The balance sheet lists the company’s assets and liabilities at a specific point in time, while the income statement (also known as the profit and loss statement) breaks down the revenue and expenses for that period. The cash flow statement tracks the inflow and outflow of money for a business, and the statement of changes in equity details the movements of shares over that period, including dividend payments and stock buybacks.
Creating financial reports requires careful attention to detail and the use of robust automation solutions to ensure that all the numbers are accurate and complete. For instance, a modern financial reporting solution like Planful will automatically monitor every transaction and record it in the financial statements, as well as track anomalies, predict future trends and help finance teams make better business decisions by providing analysis and forecasting capabilities. This can save significant time and effort, while ensuring that the financial reports meet all internal and external deadlines and requirements.
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