If you are searching for a flawless example of financial statement, then this article is for you. It gives an in-depth description of how to create a perfect example of a financial statement in any given situation.
The most common questions that people ask when they are required to present their financial statements are “where can I find financial statement examples and templates”? Or “What is the perfect example of a financial statement?”. These steps will help you achieve a flawless financial statement.
Table of Contents
Step 1: Look for a template of financial statement
A great way to start is to look for a template of the financial statement. There are many types and forms of financial statements. They all vary depending on what area of business you are involved in. If you cannot find one that meets your needs, then try creating your example using computer software or a word processor.
Step 2: Get to know the basics
Before you start creating your example of a financial statement, gather more information on what it should contain. A perfect example of a financial statement is supposed to show how the company has performed financially during a given period of time. It contains important data such as income statements, balance sheets, cash flow statements, profit and loss statements, and footnotes among others. There are also industry-specific requirements for this type of document depending on whether your business falls under finance or accounting categories.
For instance, you will need to show different sections in your management report if you are an engineer rather than a doctor. So make sure that you familiarize yourself with the basic functions before getting started, this will give you a guideline to create an effective template specific to your industry.
You can view financial statement templates on Venngage.
Step 3: Know when to create a financial statement example
An income statement example and a balance sheet example are prepared and presented by companies and other business organizations that deal with money matters such as banks, insurance companies, and credit unions. The “when” question is quite significant because you do not want to produce too little or too much information in your example. So, if you own a small business don’t go overboard with the details because nobody will be interested in knowing them all. Keep it concise and relevant so that the reader gets enough information about the finances of an organization without getting bored or overwhelmed.
If you are dealing with large-scale businesses such as multinational corporations then, on the other hand, detailed summaries may be required for financial evaluation purposes. Check out your company’s financial policy statement to understand what they would like you to include or exclude from the example. For instance, if they want year-over-year comparisons then layout the information accordingly, because it will be crucial for assessing your organization’s performance.
In all cases, you aim to present a professional document that has enough information on the company’s income and expenditures but also avoids too much detail.
Step 4: Organize your example of a financial statement
When organizing your profit and loss statement example, ensure that it includes those items that are mandatory as well as those which are not required but might help evaluate its overall performance over a given period. In some cases, the main thing is to focus on providing readers with important details and avoid useless information.
For instance, while preparing your example of a financial statement; make sure that you include starting and ending balances for all assets and liabilities because this will help the reader see how much money is available in total. You may present these visually with the use of a pie chart maker. The same thing applies to income statements where it is required to provide a clear picture of the organization’s profitability over a period of time.
The three categories of income statements are operating activities, investment activities, and financing activities. This separation helps readers analyze the finances according to the way it was obtained by a company e.g. whether from selling products or getting funds from shareholders or creditors.
Do not forget to mention important ratios such as return on equity,/equity ratios, etc.; these give a clear indication of how effectively and efficiently the business is performing. They must also know how to get credit union share certificates and more.
The example of a financial statement must also include footnotes, these additional details will allow readers to understand all aspects of your company’s finances so be sure to mention things such as salaries and bonuses for directors and key management personnel for instance because it could affect their decisions in the future.
You should also provide information about potential problems such as credit agreements that need to be fulfilled or any possible tax advice that may affect the overall performance of your organization in upper level.
Step 5: Proofreading your example Financial Statements
Before you present your example of a financial statement ensure that it has been proofread by experts who are familiar with current standards relating to this type of document. Several companies offer reliable proofreading services at reasonable rates so make sure to use one of them if you are not confident about making mistakes.
Also, make sure that your example is free from grammatical errors and has been written in clear, concise language. If needed provide additional information for particular sections by using bullet points otherwise the overall presentation will be confusing.
When preparing your example of a financial statement it is important to mention that you should do a lot of planning and checking before presenting the final document to ensure that everything looks good.
You can also ask someone else to proofread your example financial statements because their fresh look at it will help you identify additional information regarding this type of document.