What is a Financial Report and How to Make It? (with Templates)

Financial report help businesses understand their financial health. They summarize key details like income, expenses, assets, and debts, offering a clear view of performance over a set period. These reports guide decisions and support future growth planning.

However, preparing it can be complex and time-consuming. Many businesses face challenges in ensuring accuracy and compliance, especially with local standards like BIR regulations in the Philippines. Errors or delays can lead to penalties or missed opportunities.

Thus, this article will discuss what is financial statement, basic simple financial report sample, how to make a financial report, and how HashMicro accounting software can automate these processes to help your business stay compliant and make better decisions.

What is a Financial Report?

A financial report is a document that shows a company’s financial activities over a specific time. It includes details about income, expenses, assets, and debts. Businesses use these reports to understand their financial health and plan for the future.

The main goal of a financial report is to provide clear information about a company’s performance. It helps owners, investors, and managers make better decisions. Common examples include income statements, balance sheets, and cash flow statements.

Financial statements also ensure businesses stay transparent and meet legal requirements. They help track progress, find areas to improve, and create plans for growth. Keeping accurate reports is key to running a successful business.

Many businesses often utilize the help of a tool, one of which is financial reporting software. This software makes financial reporting easier, as it automates calculations and make BIR-approved reports.

What Makes a Good Financial Report?

A good financial report is essential for any business as it provides a comprehensive overview of its financial health. To be effective, it must meet specific criteria that ensure it is both reliable and useful. Here’s what makes a financial report stand out:

• Clarity and simplicity

A good financial report should be easy to read and understand. Using straightforward language, clear headings, and organized sections ensures that readers can quickly grasp the information. Complex financial jargon or cluttered data can confuse stakeholders, making the report less effective.

• Accuracy

The financial data must be precise and free from errors. Accuracy builds trust and ensures that the company’s financial position is correctly represented. Errors or inconsistencies can lead to wrong decisions or harm the business’s reputation.

• Timeliness

Timeliness is another hallmark of a good financial report. For Philippine businesses, regularly updated reports ensure compliance with BIR deadlines, helping avoid penalties. Current data also supports more effective business strategies and financial planning.

• Comprehensive information

A good financial report covers all critical areas: income, expenses, assets, liabilities, and equity. This comprehensive approach ensures that business owners and investors get a full picture of the company’s financial health, allowing for informed decisions.

• Compliance

In the Philippines, compliance with BIR-CAS standards is a key aspect of a good financial report. Reports must align with local accounting rules and regulations, ensuring they are acceptable to tax authorities. Also, financial reports must also follow the regulations of the IFRS.

A financial report is not just a tool for tracking progress, it’s essential for growth and compliance. Explore the best accounting software Philippines to make clear, accurate, timely, and regulation-compliant reports easier and help your business stay competitive and accountable.

You can also find financial statements examples in the discussions below as a guide to help you make them faster and easier.

Purpose of a Financial Report

Financial reports play a vital role in serving the needs of both internal and external stakeholders. These reports provide more than just numerical data, they offer valuable insights into the financial health and performance of a company.

Tracking business performance

The primary purpose of a financial report, such as an annual report, is to monitor a company’s performance over time. It shows income, expenses, and profit margins, helping business owners keep their operations on track. This ensures problems are identified early and addressed effectively.

Supporting decision-making

Financial reports provide key data for informed decisions. Businesses can assess if it’s time to expand, cut costs, or invest. In the Philippines, accurate reports also ensure owners are prepared for tax compliance with the Bureau of Internal Revenue (BIR).

Meeting legal and regulatory requirements

Compliance ensures businesses avoid penalties and build trust with regulators, investors, and partners by showing transparency in their financial dealings. Therefore, financial reports must comply with BIR-CAS standards to meet tax filing and auditing requirements. 

Attracting investors and securing loans

A financial report demonstrates a business’s stability and growth potential to investors and lenders. Clear and accurate data about assets, liabilities, and cash flow instills confidence, increasing the likelihood of securing funding or partnerships.

Enhancing business strategy

Beyond compliance, financial reports help businesses plan strategically. By analyzing trends, businesses can adjust pricing, cut unnecessary costs, or explore growth opportunities. They act as a roadmap for long-term success, especially in a competitive market like the Philippines.

No business can operate effectively without accurate financial reports as they promote transparency, support informed decision-making, ensure compliance with legal standards, and open doors to growth opportunities.

If you are interested in automating your financial processes and making accurate reports, click the banner below to see HashMicro’s accounting software pricing scheme.

8 Financial Report Types and Templates

Different types of reports, such as income statements, balance sheets, and cash flow statements, provide unique insights. Using templates can simplify their creation and improve accuracy. Below are some financial report sample you can use to simplify your reporting processes.

Balance sheet

A balance sheet is a financial document showing a company’s assets, liabilities, and equity at a specific time. It follows the formula: Assets = Liabilities + Equity, ensuring that all resources and obligations are accounted for and giving a clear snapshot of financial health.

Its main purpose is to assess whether a business can meet its obligations. It helps stakeholders make informed decisions about investments, loans, and growth. Comparing balance sheets over time also tracks financial progress, trends, and long-term stability. 

Below is an example of a balance sheet template:

Income statement

An income statement shows how much money a business makes and spends over a period. It includes revenues, expenses, and profits or losses. This report helps owners and stakeholders see if the business is earning enough to cover costs and make a profit.

The main purpose of an income statement is to track how well a business is performing financially. It helps identify areas to improve, control expenses, and grow profits. Investors and lenders also use it to decide if a business is worth supporting.

Below is an example of an income statement template:

By reviewing this report, businesses can plan better, spot trends, and improve their financial success. 

Cash flow report

A cash flow report shows the movement of money in and out of a business over a specific time. It tracks how much cash the company earns, spends, and retains, giving a clear picture of liquidity. Therefore, this helps businesses ensure they have enough cash to meet daily needs.

The purpose of a cash flow report is to help manage finances effectively. It highlights cash generated from operations, investments, and financing activities. Stakeholders use this report to see if a business can pay its bills, invest in growth, or handle unexpected expenses.

Below is an example of a cash flow report template:

The report is divided into three sections: operating cash flow (daily business), investing cash flow (long-term assets), and financing cash flow (loans or investments). By analyzing it, businesses can avoid cash shortages and maintain financial stability.

Change in equity

A statement of changes in equity explains how a company’s equity changes over a specific period. It tracks changes like profits, losses, dividends, and additional investments, providing a clear view of how the equity evolves.

The main purpose of this statement is to show stakeholders how profits are used—whether retained for growth or distributed as dividends. It also tracks capital contributions, withdrawals, and adjustments like revaluation gains or losses.

Below is an example of a statement of changes in equity template:

Business budget

A business budget is a financial plan that estimates a company’s income and expenses over a specific period. It helps allocate resources, control costs, and ensure financial stability. Essentially, a budget acts as a roadmap for achieving both financial and operational goals.

The purpose of a business budget is to track cash flow, plan for future investments, and identify areas to cut unnecessary expenses. Thus, it helps owners anticipate profits, manage debt, and prepare for unexpected costs, ensuring they stay on track and maintain financial health.

Below is an example of a business budget template:

A typical business budget includes projected revenues, fixed and variable costs, and potential profit margins. By regularly updating and reviewing the budget, businesses can adjust their strategies to meet financial targets and grow sustainably.

12-month business budget

A 12-month business budget is a detailed financial plan that covers an entire year. Unlike short-term budgets, it focuses on long-term goals, seasonal trends, and recurring costs. It helps businesses prepare for challenges and opportunities with a clearer picture of their financial cycles.

This type of budget allows businesses to plan ahead, align expenses with revenue patterns, and track cash flow throughout the year. It is more comprehensive than shorter budgets, offering better insights into annual growth opportunities and areas to cut unnecessary costs.

Profit and loss projection

A profit and loss (P&L) projection estimates future income and expenses over a specific period. Businesses use it to anticipate earnings, control expenses, and identify areas for improvement. It also supports decision-making by showing how strategies impact profitability over time.

The purpose of a P&L projection is to provide a clear financial roadmap. By regularly updating projections, businesses can adapt to changes and ensure they remain on track toward financial success.

Below is an example of a profit and loss projection template:

Billing statement

A billing statement is a detailed document sent to customers to summarize outstanding balances, payments, and recent transactions. It serves as a formal record of the amount owed and provides clarity about due dates, payment methods, any applicable fees, and the progress billing format when applicable.

The purpose of a billing statement is to maintain transparency in financial dealings and ensure both parties are aligned on the account’s status. Businesses use it to remind customers of pending payments, while customers rely on it to track their obligations.

Typically, a billing statement includes the customer’s details, invoice numbers, transaction dates, amounts due, the progress billing format, and the total outstanding balance. Regularly sending billing statements helps businesses manage cash flow and maintain strong client relationships.

Below is an example of a billing statement template:

How to Choose the Best Financial Report for Your Business

Selecting the right financial report depends on your business’s needs and goals. Each report serves a unique purpose, so understanding their functions is key. For example, a balance sheet helps track assets and liabilities, while an income statement shows profitability.

Consider your audience when choosing a report. Investors might need a cash flow statement to assess liquidity, while management may rely on profit and loss projections for decision-making. Tailoring the report to their expectations ensures clarity and relevance.

Additionally, choose financial reports that align with compliance standards, like BIR regulations in the Philippines. Tools like automated accounting systems can simplify generating accurate, detailed reports to support your business’s growth.

Automate Financial Reportings with HashMicro Accounting Software

Making financial reports can be stressful and time-consuming. However, HashMicro’s accounting software solves this by automating financial reporting, making the process fast and simple.

Moreover, with HashMicro, businesses can create key reports like balance sheets, income statements, and cash flow summaries in minutes. This saves time, reduces errors, and ensures compliance with local rules like BIR standards in the Philippines.

Here are the features that make HashMicro’s accounting software stand out:

1. Real-time report generation: Quickly create financial reports with updated data for better decisions.
2. Customizable templates: Tailor reports to meet your needs, making them easy to use and share.
3. Compliance-ready tools: Ensure reports meet BIR or other local standards without extra work.
4. Integration with ERP systems: Link with other tools to view all financial data in one place.
5. Error-free automation: Avoid mistakes with automated calculations and reconciliations.

HashMicro’s software turns complex reporting into an easy process. With automation, businesses can save time, reduce stress, and focus on growing their success. You can also try the features HashMicro provides with their free demo. Try it now!

Conclusion

Financial reports are the foundation of effective business management. They provide detailed insights into a company’s financial activities, helping owners and managers track performance and allocate resources efficiently. These reports also promote accountability and transparency.

HashMicro’s accounting software simplifies financial reporting by automating tasks like generating balance sheets and cash flow reports. It saves time, reduces errors, and ensures compliance with local rules like BIR standards, making financial management more efficient.

Try HashMicro’s free demo today and see how its features can transform your financial processes. From accurate reports to seamless automation, the software helps businesses save time and focus on growth. Schedule your demo and feel the difference!

Frequently Asked Questions about Financial Report

• What do you mean by financial report?

  A financial report is a document that summarizes a company’s financial activities, including income, expenses, assets, and liabilities, to provide a clear overview of its financial health and performance.

• What are the 4 types of financial reporting?

  The main types of financial reporting are the income statement, balance sheet, cash flow statement, and statement of changes in equity, each focusing on different aspects of a company’s financial health.

• What is the general purpose of financial reporting?

  The general purpose of financial reporting is to provide accurate financial information to help stakeholders make informed decisions and ensure regulatory compliance.

• What is an example of a financial report?

  An example of a financial report is an income statement, which shows a company’s revenue, expenses, and net profit over a specific period.