A financial statement template is a very crucial document in which all the business activities and financial performance of an organization is written. In other words, we can say that it is a report of an organization’s financial position, results and cash flow. It also includes a balance sheet, income statement, statement of cash flows, and a few other documents. Moreover, these financial statement templates are mostly used by government agencies, accountant firms and many other companies. It is used to check the accuracy. Sometimes for the purpose of tax, financing or any type of investment.
Key Points of Financial Statement;
Following are the crucial statements which are mandatory part of this statement. These are as follows;
Balance Sheet- It is a statement which let you know about the business activities as well as financial health of the organization. The balance sheet helps in providing an overview of the organization as well as details about current and fixed assets, liabilities, and shareholders equity, is a crucial part of this statement.
Income Statement- Another crucial part of this statement is the income statement, which focuses on the revenue and expenses of the company for a particular period. In the start, expenses are subtracted from the revenue in order to find out the actual profit of the company, which is called net income.
Cash Flow Statement- The cash flow in a financial statement reflects you how well a company is generating cash to pay all of its debts, fund the operating expenses, and fund investment. At the end, this statement records how the profits are retained in the company for the growth in the future and how it is disturbed to the external parties that the company is dealing with.
Financial Statement and its Advantages;
Financial statements are highly fruitful for deciding various crucial factors like; the ability of any business and how can they generate cash; what are their sources and how they use their cash. It is also used to evaluate whether the financial health of a company can pay back its debts, can deliver desired financial results and see if there is any issue in the profit they are getting. Moreover, this statement helps in getting the ratio to check the condition of the business, and you can also investigate a certain business transaction to check for its accuracy. It acts like an annual report which is distributed among investors so that it helps them in defining whether they want to invest in your business.
Drawbacks of a Financial Statement;
Even though there are many advantages of a financial statement, there are also a few disadvantages of it, such as it can fraudulently manipulate, which can lead the investors to believe that the result it is showing is better than what’s actually the truth. This same manipulation can also lead lenders to lend money to a business which can actually not payback its debts. Another disadvantage of a financial statement is that it is historical in nature. Therefore, it can be mislead for future projects because the financial position of the business might not be the same at that time too. For example, if any business is relying on government contacts, the results that you get from it might be robust results for its recent period, but that cannot confirm, their other products are performing well.
Financial Statement Templates
Balance Sheet
Cash Flow Statement
Cash Flow Statement
Retain Earnings Statement
Retain Earnings Statement
