What are the most important financial reports to track and analyze?

1 Income statement

An income statement, also known as a profit and loss statement, shows how much revenue your organization or department generated and how much it spent over a specific period, usually a month, a quarter, or a year. It helps you measure your profitability and compare it to your budget and previous periods. To create an income statement, you need to record all your income and expense categories and calculate the net income by subtracting the total expenses from the total revenue. You can also calculate the gross profit margin, which is the percentage of revenue that remains after deducting the cost of goods sold, and the net profit margin, which is the percentage of revenue that remains after deducting all expenses.

4 Budget variance report

A budget variance report, also known as a budget vs actual report, shows how your actual income and expenses compared to your planned or budgeted income and expenses over a specific period, usually a month, a quarter, or a year. It helps you identify and explain any deviations from your budget and adjust your spending or revenue strategies accordingly. To create a budget variance report, you need to compare your actual income and expenses to your budgeted income and expenses and calculate the variance for each category. The variance can be positive or negative, depending on whether you exceeded or fell short of your budget. You can also calculate the percentage variance, which is the ratio of the variance to the budget, to measure the significance of the deviation.

5 Key performance indicators

Key performance indicators, or KPIs, are the metrics that you use to measure and evaluate the success of your organization or department in achieving its goals and objectives. They help you track and communicate your progress and performance and identify areas for improvement. To choose and use KPIs, you need to align them with your mission, vision, and strategy and make sure they are specific, measurable, achievable, relevant, and time-bound. Some examples of KPIs for administrative managers are customer satisfaction, employee retention, revenue growth, cost reduction, and productivity.

6 Financial ratio analysis

Financial ratio analysis is the process of using financial ratios to evaluate and compare the financial performance and position of your organization or department. Financial ratios are the numerical relationships between two or more financial variables, such as income, expenses, assets, liabilities, and equity. They help you simplify and interpret the financial data and identify trends, strengths, weaknesses, and opportunities. To perform financial ratio analysis, you need to calculate and analyze various types of ratios, such as profitability ratios, liquidity ratios, solvency ratios, efficiency ratios, and market ratios. You can also compare your ratios to your industry benchmarks, competitors, or historical data.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?