A financial report provides a snapshot of a business’s finances over a period, typically a quarter or a year. It includes the business’s assets (such as cash and inventory), liabilities (such as accounts payable and loans payable) and equity (such as common stock and retained earnings) at a specific point in time. The report also reflects profits and losses for the company during that time frame. A company’s financial report may include a balance sheet, income statement and cash flow statement, among others.
Financial statements are used by businesses for a variety of purposes, from assessing the profitability and stability of a company to planning for future growth. A comprehensive financial report can help attract investors and lenders, as it provides clear evidence of a company’s steady revenue streams, responsible debt management and consistent cash flow.
Besides being used for internal evaluation, financial reports are also required by law in most jurisdictions for publicly-traded companies. Regular, accurate financial reporting helps businesses stay compliant and improve their work efficiency through streamlined data collection, analysis and processing. In addition, a professional reporting tool like FineReport can connect data from various systems and realize real-time information updating, saving energy for manual modification and improving work efficiency.
Several empirical studies have found that financial reporting can reduce uncertainty for managers through belief updating. Theoretical studies have also explored the impact of financial reporting on real decisions at firms, including the capital market and input market effects.