Having to report financial information can be a daunting task.
While modern-day spreadsheets do a great job of containing data, they don’t do the best job of presenting this information to a broader audience—nor are they the most exciting things to look at!
Using visual elements when preparing financial statements can make them compelling, engaging and can even influence how people use the data.
Just customize our financial statement templates with Venngage’s Report Maker, add your data, brand colors and logo and you’ll have the perfect financial reports that will actually get your stakeholders to read, engage and remember.
Learn how you can turn your financial reports around by using visual aids when presenting financial statements to your stakeholders.
Click to jump ahead:
- What is a financial statement?
- Types of financial statements
- How to use visual aids in financial statements
- How to read financial statements
What is a financial statement?
Financial statements are reports containing data that give insight into the operations and financial performance of a business. Financial statements typically include balance sheets, income statements, cash flow statements and statements of change in equity.
We have templates you can use to present each type of financial statements, which will be covered more in detail below.
But first, how exactly do financial statements help a business?
Finance professionals use various metrics to create financial statements, which, ultimately, should be used to help management make strategic decisions that lead the business towards its goals. Such as how to handle a business’s credit and what to invest in
For example, the profit margin ratio shows the profitability of business activities. It is calculated by dividing net profit by revenue, and can be used to decide which business activity is the most lucrative.
Staring at financial jargon and mumbo jumbo might seem like a bore, right? But, when the information is taken and applied to real-life business situations, it can significantly help a business get ahead!
Consider this example:
A shoe company manufactures various kinds of shoes. Their school shoes and sports shoes are both bestsellers, going for $100 each. The sports shoe costs $75 to produce, while the school shoe costs $35.
The revenue is $100 for each product, but the profit (revenue minus cost) is different.
After assessing the data from the financial statements, management decides to stop producing the sports shoe because they are making a much higher profit margin on the other type of shoe.
Rather than selling both, they’ll focus solely on producing the school shoes, so all their resources are spent on bringing in more profit.
Types of financial statements
There are a number of financial statements, and each one is vastly different. The way the information is presented depends on which aspect of operations being captured.
While there is a wide variety of statements and reports, they all go hand-in-hand and help to effectively show where the business is at, where it’s coming from and where it’s going.
Not a designer? Not a problem. Our professional financial report templates are perfect for non-designers to create impressive visual content.
Income Statement / Profit and Loss Statement
The income statement shows how much money is going in and out of the business through revenue and expenses.
It shows total revenue for a period and how much was spent on producing the goods to generate gross profit. It then details all operating expenses, such as office staff and marketing costs, to give a final net income amount.
Comparing the income statement with previous years can show where resources have been allocated and help explain any changes in profitability.
Balance Sheet or Statement of Financial Position
While the income statement shows cash flow over a specified period, the balance sheet shows only the position of a business at one point in time.
Think of it like this: an income statement could be compared to a video while the balance sheet is a single photograph. Although it’s a single point in time, it still tells a valuable story.
The balance sheet shows the business’s assets, liability and shareholder equity.
As you can see from the balance sheet template, it is referred to as a balance sheet because both sides need to ‘balance’:
Assets = Liabilities + Owners Equity.
For example, if a business has $500,000 in assets, it would have $500,000 made up of liabilities and owners equity. Showing assets and liabilities on any given day means that it’s a handy tool when looking to analyze liquidity and insolvency risk.
Cash Flow Statement
The cash flow statement works with the balance sheet and income statement to show how changes in income and the balance sheet accounts (such as accounts receivable and accounts payable) impact cash.
The components are broken down into operating, investing and financing activities.
This is important to show the difference between a cash increase from sales and a cash increase from taking out a loan. Both activities inject cash into a business, but in two very different ways: one is an asset on the balance sheet while the loan is a liability.
Change in Equity Statement
The statement of changes in equity reconciles the balances of the companies’ beginning and ending amount of equity during a reporting period.
The statement is helpful because it details why there has been a change in the owners’ equity during the reporting period.
For example, it differentiates equity that has arisen due to retained earnings vs. that from paid-in capital from the owners. Retained earnings are net income after taking out the dividends, whereas paid-in capital comes from the owner’s pocket.
Differentiating the source of equity is important for performance analysis.
Annual report
All of the financial statements are wrapped up nicely in an annual report issued at the end of the reporting period to detail the business’s activities and performance.
The annual report can also include a letter from the CEO, business performance highlights, and financial or performance projections for the coming years.
How to use visual aids in financial statements
Most humans are visual learners. This means we need to have things presented to us in a visually pleasing way for it to make sense and to leave a meaningful, long-lasting impression.
An Excel balance sheet template might have all the financial information you need. Still, if it’s not visually appealing (like most plain spreadsheets!), it runs the risk of not getting through to people and effectively communicating the message.
You don’t want that happen, especially when you need to present hard-to-get financial information to stakeholders who may not fully understand how these statements actually work.
When presented to management and stakeholders, financial statements should be concise, correct and visually appealing with simplified jargons.
Formalities aside, most people in management positions don’t want to see complicated spreadsheets—they want information that’s easy to understand and easy to look at.
So, how do you make financial statements visually appealing? Let’s take a look:
Formatting
This might sound silly, but it’s essential that the document is formatted correctly, so it’s engaging and easy to follow.
It doesn’t matter how highly educated someone is; if they’re looking at a document that doesn’t have nicely formatted headings, subheadings, text and visual components, they’re going to become frustrated—or at least less interested and engaged.
Financial statements are used to communicate with key stakeholders, so they need to look professional: impression and reputation matter.
Correctness
It’s vital for financial data to be presented accurately and with the right layout.
- Financial data is no good to anyone if the correct figures haven’t been used. Using a financial statement template can help to ensure you’ve got the right numbers where they’re meant to be.
- The layout and structure of financial statements are universal across the world, so it will be very obvious to your audience if your statements do not follow the correct structure.
Color
Color impacts perception and can even influence behaviour. If your financial statements are being used to persuade someone into a big contract or as an influencing factor in your application for finance, then choosing the right colors could go a long way!
It’s also important to keep your financial documents on-brand. Make sure you use your brand colors, logo and stick to your brand style guide to give your document a boost of professionalism.
With a Business account, Venngage users can enjoy our one-click branding feature: upload your brand elements to My Brand Kit and apply your brand colors, logo or other assets to any designs you have in seconds:
Graphic elements
Do you know that saying “A picture is worth a thousand words”? Well, the same goes for graphs!
Numbers are fine to read but not nice to look at. Data visualization elements such as graphs, charts and images help to convey complex data in a simplified and meaningful way.
Rather than trying to explain the relationship between numbers on a page, put it in a finance infographic and let the image speak for itself.
You can also professional icons to your financial report designs. We offer 40,000+ icons that can be used for any business communications needs—or in this case, financial communication.
How to read financial statements
Financial statements exist to provide useful information that help management and stakeholders make strategic decisions.
They contain a lot of raw data that can be used in calculations to give a picture of the financial health of a business. The below calculations may come in handy when using financial statements for decision making:
Working capital ratio:
Current Assets / Current Liabilities
This ratio demonstrates the ability to turn assets into cash to pay off liabilities. It helps work out the liquidity needs of a business.
Return on equity:
(Net Earnings – Preferred Dividends) / Common Equity Dollars
Return on equity shows the profit as a percentage of equity invested in the company.
Operating margin:
Operating Income / Net Sales
Similar to the profit margin touched on earlier, the operating margin shows how much revenue remains once variable costs—like raw material and staff wages—have been paid.
In summary: Always consider using visuals when presenting your financial statements to win over stakeholders
There’s a lot to know when it comes to presenting financial information, but it doesn’t need to be a daunting task.
We’ve got financial statement templates to help make the process simple, helping you create an on-brand, professionally looking and visually appealing set of financial statements, even if you have no design experience.
Easily fulfill your reporting obligations and present your informative, engaging and educational financial statements to management and stakeholders in a jargon-free and straightforward way! Why let the numbers do all the talking?
Need to make a financial statement? Start creating in seconds with our professional templates and simple online editor.