Financial analysis reports represent the company’s current position, strengths and weaknesses. There are basic sections typically always included by someone with a finance or accounting degree, like profit, revenue and liquidity. But there are a few key “extra” sections that can improve the report’s overall structure and quality. Listed below are often essential components of a successful financial analysis report.
The executive summary sets the tone for your entire financial report. An executive summary should essentially outline everything your report says, including specific key findings. The executive summary is often confused with the introduction section, but there is a distinct difference between the two. An introduction should define all the terms needed to understand your report. An executive summary should skip the background information and instead highlight the main pieces of your report. An executive summary is the strongest way to set the precedent for your successful financial analysis report.
While an investment analysis is often included in financial reports, this is the one section that can make or break your report. The investment analysis section should be treated as a thesis statement. This section should include a detailed analysis of the positives and negatives of the company as an investment. However, it is much more than a pro/con list. The investment analysis should explore things company-specific things like liquidity and industry-specific things like growth. If this section is lacking detail, the whole financial analysis report loses validity.
As with any report, it is important to explain to the reader how you obtained your information. A financial analysis report requires facts and figures that need to be cited. In the methodology section, you should justify and explain how you went about getting your information. Here, you can also review the quality and quantity of the documents you had to work with. For example, you can explain how you found (or worked without) missing information. The methodology section is often used in the best financial analysis reports, providing a more complete look at the company’s statements.
The operational efficiency of a business is how effectively it organizes resources. This section is key to determining the business’s potential and future growth. Businesses that waste time and man power greatly undermine their value. This section expresses how profitable the business is, without actually dealing with profits. It should include how efficient the company is. You can see if the company is getting things done or not. When writing a financial analysis report, including a section on operational efficiency can best express how cost-effective the business is.
You should leave the reader with a look into the company’s future. This section of a financial analysis report is often overshadowed by the summary. While reiterating your points is fine, you also need to explain what that means for the company. Including predictions based on market research or business financial standing ties your report together. If there are many customer complaints about the company, it could affect the outlook in the short or medium term. Additionally, think about increasing industry trends and current cash flow. Of course, try to end the report on a positive note.
Writing a financial analysis report can be overwhelming. If you want your report to be as effective as possible, include a few extra sections in addition to the traditional ones. A powerful executive summary will draw your reader in. A well-rounded investment analysis and detailed methodology can bolster your report. Including a section on the company’s operational efficiency can lead into a compelling conclusion that explores where the industry is going and what the company can improve. These components will make your financial analysis report powerful, useful and memorable.