This article goes over how to generate a Profit and Loss, a Balance Sheet and a Cash Flow Statement report in Quickbooks and other accounting software. We use these documents in a standardized format in order to sync them to your financial model.
As part of our financial modeling services, our team can help keep your financial model up to date against your actuals. Our team developed a system so these number sync with your spreadsheet without the need to re-format them every time.
The P&L statement, also known as the income statement, summarizes a company's revenues, costs, and expenses over a specific period, typically a month or year. It starts with revenue, deducts the cost of goods sold to determine gross profit, and then subtracts operating expenses to calculate operating profit.
Non-operating items such as interest and taxes are then accounted for, resulting in the net profit, which indicates the company's overall profitability.
The balance sheet provides a snapshot of a company's financial position at a specific point in time. It lists assets (what the company owns), liabilities (what the company owes), and equity (the owner's stake in the company).
Assets are divided into current (e.g., cash, inventory) and non-current (e.g., property, equipment), while liabilities are categorized as current (e.g., accounts payable) and non-current (e.g., long-term debt). Equity includes common stock and retained earnings.
The cash flow statement tracks the flow of cash in and out of the business over a period of time, divided into three sections: operating activities, investing activities, and financing activities. Operating activities cover cash transactions related to core business operations, investing activities involve cash used for purchasing or selling long-term assets, and financing activities include cash flows from issuing or repaying debt and equity.
This statement helps assess the company's liquidity and cash management.
Since our financial model template operates on a monthly basis, we expect reports in a monthly format. This granularity allows for more precise tracking of performance and easier identification of trends and anomalies. At the end of each period, these monthly reports are consolidated to provide a comprehensive view of the financial health of the business over longer periods, such as quarterly or annually.
As we work on building your financial model, it is essential that we only accept financial statements that are compliant with GAAP (Generally Accepted Accounting Principles) or IFRS (International Financial Reporting Standards). This is consistent with industry practices and ensures regulatory compliance, similar to how accounting softwares like QuickBooks, Xero, Sage, and others function by only working with standardized and recognized accounting principles.
By adhering to GAAP or IFRS principles and maintaining monthly reporting, we can ensure that the financial model remains reliable, compliant, and highly informative for your short- and long-term strategic planning.
Where to find these reports?
Financial reports such as the Profit and Loss (P&L) Statement, Balance Sheet, and Cash Flow Statement are standard documents available in most financial and accounting platforms. You can typically find these reports in the 'Reports' section.
In most platforms, once you navigate to the 'Reports' section, you will have the option to select the type of report you need. These sections are designed to be user-friendly, allowing you to generate, view, and download your financial statements with ease. By selecting the desired report and specifying the time period, the system compiles and displays the data for you.
In Quickbooks Online, you can find the standardized reports under the 'Reports' section on the sidebar.
The default settings will produce a Consolidated Report, so it's important that you adjust them to generate a monthly version. The most important settings to accomplis this are.
Our financial model is designed to automatically sync with monthly statements that use GAAP(Generally accepted accounting principles). You can use the templates below as a reference.
Please bear in mind our team will take the financials you provide us as 'actuals'.
The Assumptions Sheet lets users input key variables impacting business forecasts. It includes sections like Capital Expenditures and Loans, guiding the automatic estimation of costs like computer purchases and setting depreciation periods for various assets.
Organized into sections for various company roles, the Staff Sheet allows for detailed input and monitoring of staff-related costs, tailor roles and expenses, track salary increments, and plan for new hires.
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