HOW TO PREPARE A YEAR-END FINANCIAL REPORT
PRESENTED NEW DELHI INSTITUTE OF MANAGEMENT
A FINANCIAL YEAR-END REPORT tells shareholders, government agencies, and other interested people how your company performed financially during the preceding year.
A
BALANCE SHEET Summarizes your firm’s assets, liabilities and net worth
WHAT
DOCUMENTS ARE USUALLY NEEDED
TO PRODUCE THE REPORT?
B
C
INCOME STATEMENT Details your firm’s revenues and expenses
STATEMENT OF CASH FLOW Reports your firm’s sources and uses of cash
A
BALANCE SHEET STEP 1: Calculate assets Current assets Investments Property, plans and equipment Intangible assets Other assets
A
BALANCE SHEET STEP 2: Calculate liabilities
Current liabilities (accounts payable, taxes, wages, etc.)
Long-term liabilities (bank loans, bonds payable, etc.)
A
BALANCE SHEET STEP 3: Calculate company’s net worth Use these equations
NET WORTH ASSETS
Assets
Liabilities
Liabilities
Net worth
B
INCOME STATEMENT STEP 1: Calculate revenue Net sales Cost of goods sold
GROSS PROFIT
Sales figure
Costs to make or buy goods
B
INCOME STATEMENT STEP 2: Calculate operating expenses General and administrative expenses Employee compensation Marketing and advertising
B
INCOME STATEMENT STEP 3: Determine net income Use this equation
Gross profit
Operating expenses
Net income
C
STATEMENT OF CASH FLOW SECTION 1: Operating expenses adjustments that pertain to core business activities
Depreciation expense Net change to accounts payable Net change to accounts receivable
C
STATEMENT OF CASH FLOW SECTION 2: Investing activities adjustments related to long-term assets
Purchase of new equipment, machinery or fixed assets Proceeds from sale of fixed assets
C
STATEMENT OF CASH FLOW SECTION 3: Financing activities adjustments linked to bank debts and stocks
Proceeds from issuance of common stock Dividends paid Long-term loan repayment
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