A financial statement is a business document that is prepared by the accountants and it indicates the key assets which the business owner owes. It is an important document that is created by a firm indicating the complete financial status of the organization transparently without any ambiguity. It is important because all the key investors which are interested to have shares or partnership with the organization or the company would like to know about the financial status of the company with whom they are putting in their money. This financial statement gives them a clear future picture for their investment.
The financial statements are not that much simple because they present the whole record and growth factors of the company in one shot so the understanding of the financial statement and its interpretation is little bit complex. The financial statements contain major elements and to understand the financial statements those key elements and their relationship with respect to the company should be clearly understood.
Here is preview of a Financial Statement Template created using MS Excel 2013,
The key elements that are included in the financial statement are detailed as;
- Expenses:
These terms related the amount of the money that is annually spent by that organization on it various expenditures. This is the money which goes out of the company in the form of its employee’s salaries, purchase of services, products and other in house managerial expenses. All these are summed up over here as the expense money.
- Revenues:
This is the income that comes into that organization as a result of its annual business deals and activities. This may also be regarded as the annual sale income of a company if it is an import export related firm.
- Profits:
The annual profits that are made by that firm are given by calculating the difference between the expense and the revenues. This is going to give the status of the profits or the loss of the company at the present stage. It is important to note that the status of all the expenses, revenues and profits should be given by mentioning the due date till which the record has been updated because if the information given in the statement is not updated then it is useless for the investor.
- The equity money:
It is the amount which belongs to the owner of that business. This actually tells that how much financially that business holder is strong enough to bear up some losses if encountered in the business.
- The assets owned by the firm:
This relates all the information about the present assets and their status which are owned by the firm. This is going to help the investor to key evaluate the investment possibilities and their outcomes. These assets may be in terms of any sort of property which is under the business use and any sort of inventory present in the stock.
- Liabilities:
It is defined as the sources which the company owes to other organizations like in the form of some debts, loans or some shares.
Here is download link for above mentioned Financial Statement Template,