A financial report provides a snapshot of a company’s assets, liabilities and shareholders’ equity at the end of a reporting period. It includes all transactions (such as sales invoices, purchase orders and expense receipts) that affect the accounts, plus the beginning and ending accounting balances for each account. Financial reports are typically based on a framework such as US Generally Accepted Accounting Principles or International Financial Reporting Standards.
A well-formed financial report is a key to understanding your business performance, attracting investors and building trust with stakeholders. It is also a requirement for businesses that are publicly traded, following SEC filing requirements and other regulatory guidelines.
The most important purpose of financial reports is to provide transparency into a company’s operations and support decision-making. For example, if a finance team sees revenue trends and cash flow patterns, they can better forecast and adjust plans for growth. Similarly, a CFO might review a financial statement before making new hires or changing compensation policies. Financial reports are used by management, finance teams, investors, lenders, regulators and tax authorities, and other stakeholders to evaluate a company’s performance, compliance and valuation.
A well-formed financial statement is a key to understanding your business performance, driving profitability and building trust with stakeholders. It is a requirement for businesses that are publicly traded, including those who follow SEC filing requirements and other regulatory guidelines. It is also a requirement for businesses with complex unit economics, such as software-as-a-service (SaaS) and marketplace companies.