Business Financial Statement: Learn How To Prepare Your Own

By: Michael J. Clark|LRL Writer  

Any business needs records of the finances to be maintained on a regular basis. This can be done by preparing a business financial statement which can be made without the aid of a professional. This is mainly required if you need a business loan, enter into a business transaction, introduce a partner to your business, sell your business or even if you need to understand your business better. A business financial statement provides valuable information about the business which may be important to a financial institution, an investor or to a business partner. It is also important to the business owner and other key people in the business to get a deeper insight into the business and to explore areas which can be improved.

A business financial statement has three main parts - the profit and loss statement, a balance sheet and a cash flow statement. A profit and loss statement reflects the capability of a business to buy or sell inventory to make a profit and sometimes a loss. The profits are usually measured over a time period like a month, a quarter, half-year or annual. The online forms do the math once the numbers are entered on the excel sheet. Instructions are clear and there are quite a few features to help you through the process.

The resources used to run a business is shown using a balance sheet in a financial statement. Also the financial situation of a business at a particular period of time can be found out using this. This usually is used to satisfy creditors and to manage the inventory of the company efficiently. Even in this case the online excel sheets do the math when the figures are entered.

As the name suggests the cash flow statement of the business financial statement gives information about the cash flow into the company based on day-to-day operations and outside investments too. The outflow of cash is also shown by this statement and the expenses and investments are clearly reflected here.

Another feature of financial statement is the financial ratio which is made up of formulas to evaluate the financial status of a company and is also used to analyze business statements. Financial ratios are very helpful as a business person can find out the strengths and weaknesses of the company's business operations. The financial statements provide the figures for financial ratios. Anyone can calculate the gross profit, working capital, liabilities or assets, debts, returns, earnings before interest and taxes and such other features from the financial ratios.

The business financial statement can be easily accessed and downloaded with ease. They can be copied and sent from one system to another as attachments. You can fill them up quite easily after downloading them or fill them online and take print outs. The excel sheet is excellent for filling in the figures where required and getting the results within minutes as you don't need to do the math. The records should be maintained for all references for present and future use.

Click here to view sample Business Financial Statement

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