A financial report is a formal document that captures all the significant financial activities within your business during a certain period. It is a crucial tool that not only provides you and your key stakeholders with valuable insights, but also potential investors and banks who may be looking into your company as an investment or credit opportunity.
A comprehensive financial report brings together key data from your business’s balance sheet, income statement, and cash flow statement. It uses accrual accounting to match revenues with expenses regardless of when they are received or paid, and gives insight into the profit or loss for the reporting period. A cash flow statement details the inflows and outflows of cash in and out of your company, broken down into operational and financing activities.
The information you provide in a financial report can be used to predict your company’s future financial performance. By analyzing past trends and comparing them to current data, you can find out what’s working and what isn’t. Then, you can make informed decisions about how to invest your resources to ensure a healthy financial status for the future.
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