How to Write an Annual Financial Report

Businesses large and small produce annual financial reports as a way of informing directors, shareholders and customers of their progress, the current state of the firm and its financial position. These reports are usually prepared in time for the company to issue them at the annual general meeting or to publish and distribute to all stakeholders at the end of the fiscal year. Include as much information as possible to make the report on your business comprehensive.


Begin your annual financial report with a description of the company and an overview of its operations during the past year. The overview should contain highlights and major achievements such as successful sales results, company expansion or the performance of remarkable staff members. Refer to the company’s vision for the year ahead, and list any favorable publicity the business has enjoyed. Use language that is formal and business-like, positive and direct to write the report.

CEO Report

Follow the overview with a report or message from the business owner, chief executive officer, board chair or president. Write this report using inspirational language, giving recognition to the employees for their hard work and to the customers for their loyalty and support. Outline the CEO’s perspective of the business’s success to date and the direction he envisions for the company over the next few years.

Balance Sheet

For the financial section of the report, prepare the company’s balance sheet for the fiscal year. List the assets on the left-hand side, including cash in the bank and outstanding receivables that were invoiced during the fiscal period. List liabilities on the right, including outstanding payables, mortgages and other loans as well as the company’s net worth, which is the value of the company’s possessions if all outstanding debts were paid and the assets were sold off.

Income Statement

While the balance sheet shows the company’s overall financial position, the income statement shows the profit and loss for the fiscal period. Prepare a list of all revenues and sales under the heading Income. Deduct all returns you expect to pay, which will give you your net income. On the lower half of the page under the heading Expenditure, list variable costs such as raw materials and manufacturing costs. Deduct these from your net income to get the gross profit. List all your overhead and fixed costs, such as rent, salaries, utilities and expenses, and subtract them from the gross profit to get your net profit amount.

Cash-Flow Statement

Prepare a cash-flow statement that shows the amount of money that came into the company, money that you placed in investments and payments made to buy or sell capital items, such as machinery or real estate. This section also includes the total value of interest paid on all bank accounts and loans, and the income taxes paid to the Internal Revenue Service.


Make notes of any financial items that may require explanations. For example, if the cash flow statement shows investments you may want to explain the reason for choosing those investments. Include the reason for deferring any amounts to the following year, whether income, expenditures or taxes. Provide details of the accounting practices you use, such as your policy for procurement or levels of payment authorization