presentation of revenue in financial statements

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Presentation of Financial Statements (IAS 1)

Last updated: 14 November 2023

IAS 1 serves as the main standard that outlines the general requirements for presenting financial statements. It is applicable to ‘general purpose financial statements’, which are designed to meet the informational needs of users who cannot demand customised reports from an entity. Documents like management commentary or sustainability reports, which are often included in annual reports, fall outside the scope of IFRS, as indicated in IAS 1.13-14. Similarly, financial statements submitted to a court registry are not considered general purpose financial statements (see IAS 1.BC11-13).

The standard primarily focuses on annual financial statements, but its guidelines in IAS 1.15-35 also extend to interim financial reports (IAS 1.4). These guidelines address key elements such as fair presentation, compliance with IFRS, the going concern principle, the accrual basis of accounting, offsetting, materiality, and aggregation. For comprehensive guidance on interim reporting, please refer to IAS 34 .

Note that IAS 1 will be superseded by the upcoming IFRS 18 Presentation and Disclosure in Financial Statements .

Now, let’s explore the general requirements for presenting financial statements in greater detail.

Financial statements

Components of a complete set of financial statements.

Paragraph IAS 1.10 outlines the elements that make up a complete set of financial statements. Companies have the flexibility to use different titles for these documents, but each statement must be presented with equal prominence (IAS 1.11). The terminology used in IAS 1 is tailored for profit-oriented entities. However, not-for-profit organisations or entities without equity (as defined in IAS 32), may use alternative terminology for specific items in their financial statements (IAS 1.5-6).

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Compliance with IFRS

Financial statements must include an explicit and unreserved statement of compliance with IFRS in the accompanying notes. This statement is only valid if the entity adheres to all the requirements of every IFRS standard (IAS 1.16). In many jurisdictions, such as the European Union, laws mandate compliance with a locally adopted version of IFRS.

IAS 1 does consider extremely rare situations where an entity might diverge from a specific IFRS requirement. Such a departure is permissible only if it prevents the presentation of misleading information that would conflict with the objectives of general-purpose financial reporting (IAS 1.20-22). Alternatively, entities can disclose the impact of such a departure in the notes, explaining how the statements would appear if the exception were made (IAS 1.23).

Identification of financial statements

The guidelines for identifying financial statements outlined in IAS 1.49-53 are straightforward and rarely cause issues in practice.

Going concern

The ‘going concern’ principle is a cornerstone of IFRS and other major GAAP. It assumes that an entity will continue to operate for the foreseeable future (at least 12 months). IAS 1 mandates management to assess whether the entity is a ‘going concern’. Should there be any material uncertainties regarding the entity’s future, these must be disclosed (IAS 1.25-26). IFRSs do not provide specific accounting principles for entities that are not going concerns, other than requiring disclosure of the accounting policies used. One of the possible approaches is to measure all assets and liabilities using their liquidation value.

See also this educational material at IFRS.org.

Materiality and aggregation

IAS 1.29-31 emphasise the importance of materiality in preparing user-friendly financial statements. While IFRS mandates numerous disclosures, entities should only include information that is material. This concept should be at the forefront when preparing financial statements, as reminders about materiality are seldom provided in other IFRS standards or publications.

Generally, entities should not offset assets against liabilities or income against expenses unless a specific IFRS standard allows or requires it. IAS 1.32-35 offer guidance on what can and cannot be offset. Offsetting of financial instruments is discussed further in IAS 32 .

Frequency of reporting

Entities are required to present a complete set of financial statements at least annually (IAS 1.36). However, some Public Interest Entities (PIEs) may be obliged to release financial statements more frequently, depending on local regulations. However, these are typically interim financial statements compiled under IAS 34 .

IAS 1 also allows for a 52-week reporting period instead of a calendar year (IAS 1.37). This excerpt from Tesco’s annual report serves to demonstrate this point, showing that the group uses 52-week periods for their financial year, even when some subsidiaries operate on a calendar-year basis:

If an entity changes its reporting period, it must clearly disclose this modification and provide the rationale for the change (IAS 1.36). It is advisable to include an explanatory note with comparative data that aligns with the new reporting period for clarity.

Comparative information

As a general guideline, entities should present comparative data for the prior period alongside all amounts reported for the current period, even when specific guidelines in a given IFRS do not require it. However, there’s no obligation to include narrative or descriptive information about the preceding period if it isn’t pertinent for understanding the current period (IAS 1.38).

If an entity opts to provide comparative data for more than the immediately preceding period, this additional information can be included in selected primary financial statements only. However, these additional comparative periods should also be detailed in the relevant accompanying notes (IAS 1.38C-38D).

IAS 1.40A-46 outlines how to present the statement of financial position when there are changes in accounting policies, retrospective restatements, or reclassifications. This entails producing a ‘third balance sheet’ at the start of the preceding period (which may differ from the earliest comparative period, if more than one is presented). Key points to note are:

• The third balance sheet is required only if there’s a material impact on the opening balance of the preceding period (IAS 1.40A(b)).
• If a third balance sheet is included, there’s no requirement to add a corresponding third column in the notes, although this could be useful where numbers have been altered by the change (IAS 1.40C).
• Interim financial statements do not require a third balance sheet (IAS 1.BC33).

IAS 8 also requires comprehensive disclosures concerning changes in accounting policies and corrections of errors .

Statement of financial position

IAS 1.54 enumerates the line items that must, at a minimum, appear in the statement of financial position. Entities should note that separate lines are not required for immaterial items (IAS 1.31). Additional line items can be added for entity-specific or industry-specific matters. IAS 1 permits the inclusion of subtotals, provided the criteria set out in IAS 1.55A are met.

Additional disclosure requirements are set out in IAS 1.77-80A. Of particular interest are the requirements pertaining to equity (IAS 1.79), which begin with the number of shares and extend to include details such as ‘rights, preferences, and restrictions relating to share capital, including restrictions on the distribution of dividends and the repayment of capital.’ While these kinds of limitations are common across various legal jurisdictions (for example, not all retained earnings can be distributed as dividends), many companies neglect to disclose such limitations in their financial statements.

For guidance on classifying assets and liabilities as either current or non-current, please refer to the separate page dedicated to this topic.

Statement of profit or loss and other comprehensive income

IAS 1 provides two methods for presenting profit or loss (P/L) and other comprehensive income (OCI). Entities can either combine both P/L and OCI into a single statement or present them in separate statements (IAS 1.81A-B). Additionally, the P/L and total comprehensive income for a given period should be allocated between the owners of the parent company and non-controlling interests (IAS 1.81B).

Minimum contents in P/L and OCI

IAS 1.82-82A specifies the minimum items that must appear in the P/L and OCI statements. These items are required only if they materially impact the financial statements (IAS 1.31).

Entities are permitted to add subtotals to the P/L statement if they meet the criteria specified in IAS 1.85A. Operating income is often the most commonly used subtotal in P/L. This practice may be attributed to the 1997 version of IAS 1, which mandated the inclusion of this subtotal—although this is no longer the case. IAS 1.BC56 clarifies that an operating profit subtotal should not exclude items commonly considered operational, such as inventory write-downs, restructuring costs, or depreciation/amortisation expenses.

Profit or loss (P/L)

All items of income and expense must be recognised in P/L (or OCI). This means that no income or expenses should be recognised directly in the statement of changes in equity, unless another IFRS specifically mandates it (IAS 1.88). Direct recognition in equity may also result from intra-group transactions . IAS 1.97-98 require separate disclosure of material items of income and expense, either directly in the income statement or in the notes.

Expenses in P/L can be presented in one of two ways (IAS 1.99-105):

• By their nature (e.g., depreciation, employee benefits); or
• By their function within the entity (e.g., cost of sales, distribution costs, administrative expenses).

When opting for the latter, entities must provide additional details on the nature of the expenses in the accompanying notes (IAS 1.104).

Other comprehensive income (OCI)

OCI encompasses income and expenses that other IFRS specifically exclude from P/L. There is no conceptual basis for deciding which items should appear in OCI rather than in P/L. Most companies present P/L and OCI as separate statements, partly because OCI is generally overlooked by investors and those outside of accounting and financial reporting circles. The concern is that combining the two could reduce net profit to merely a subtotal within total comprehensive income.

All elements that constitute OCI are specifically outlined in IAS 1.7, as part of its definitions.

Reclassification adjustments

A reclassification adjustment refers to the amount reclassified to P/L in the current period that was recognised in OCI in the current or previous periods (IAS 1.7). All items in OCI must be grouped into one of two categories: those that will or will not be subsequently reclassified to P/L (IAS 1.82A). Reclassification adjustments must be disclosed either within the OCI statement or in the accompanying notes (IAS 1.92-96).

To illustrate, foreign exchange differences arising on translation of foreign operations and gains or losses from certain cash flow hedges are examples of items that will be reclassified to P/L. In contrast, remeasurement gains and losses on defined benefit employee plans or revaluation gains on properties will not be reclassified to P/L.

The practice of transferring items from OCI to P/L, commonly known as ‘recycling’, lacks a concrete conceptual basis and the criteria for allowing such transfers in IFRS are often considered arbitrary.

Tax effects

OCI items can be presented either net of tax effects or before tax, with the overall tax impact disclosed separately. In either case, entities must specify the tax amount related to each item in OCI, including any reclassification adjustments (IAS 1.90-91). Interestingly, there is no such requirement to disclose tax effects for individual items in the income statement.

Statement of changes in equity

IAS 1.106 outlines the minimum line items that must be included in the statement of changes in equity. Subsequent paragraphs specify the disclosure requirements, which can be addressed either within the statement itself or in the accompanying notes. It’s crucial to note that changes in equity during a reporting period can arise either from income and expense items or from transactions involving owners acting in their capacity as owners (IAS 1.109). This means that entities cannot adjust equity directly based on changes in assets or liabilities unless these adjustments result from transactions with owners, such as capital contributions or dividend payments, or are otherwise mandated by other IFRSs.

Statement of cash flows

The statement of cash flows is governed by IAS 7 .

• Explanatory notes

Structure of explanatory notes

The structure for explanatory notes is detailed in IAS 1.112-116. In practice, there are several commonly adopted approaches to organising these notes:

Approach #1:

• Primary financial statements (P/L, OCI, etc.)
• Statement of compliance and basis of preparation
• Accounting policies

Approach #1 is logically coherent, as understanding accounting policies is crucial before delving into the financial data. However, in reality, few people read the accounting policies in their entirety. Consequently, users often have to navigate past several pages of accounting policies to reach the explanatory notes.

Approach #2:

• Primary financial statements (P/L, OCI, etc)

In Approach #2, accounting policies are treated as an appendix and positioned at the end of the financial statements. The advantage here is that all numerical data is clustered together, uninterrupted by extensive descriptions of accounting policies.

Approach #3:

• Explanatory notes integrated with relevant accounting policies

Approach #3 pairs accounting policies directly with the associated explanatory notes. For example, accounting policies relating to inventory would appear alongside the explanatory note that breaks down inventory components.

Management of capital

IAS 1.134-136 outline the disclosures related to capital management. These provisions apply to all entities, whether or not they are subject to external capital requirements. An important note here is that entities are not obligated to disclose specific values or ratios concerning capital objectives or requirements.

IAS 1.137 mandates disclosure of dividends proposed or declared before the financial statements were authorised for issue but not recognised as a distribution to owners during the period. Furthermore, entities are required to disclose the amount of any cumulative preference dividends not recognised.

Disclosure of accounting policies

IAS 1 specifies the requirements for disclosing accounting policy information which are discussed here .

Disclosing judgements and sources of estimation uncertainty

IAS 1 mandates disclosing judgements and sources of estimation uncertainty .

Other disclosures

Additional miscellaneous disclosure requirements are detailed in paragraphs IAS 1.138.

IFRS 18 Presentation and Disclosure in Financial Statements

The upcoming IFRS 18 Presentation and Disclosure in Financial Statements , which will supersede IAS 1, aims to enhance the comparability and transparency of financial reporting, focusing on the statement of profit or loss. Key changes include:

• The introduction of two new subtotals in the P/L statement: ‘operating profit’ and ‘profit before financing and income taxes’.
• A requirement for the reconciliation of management-defined performance measures (also known as ‘non-GAAP’ measures) with those specified by IFRS.
• Refined guidelines for the aggregation and disaggregation of information within the primary financial statements.
• Limited changes to the statement of cash flows, establishing operating profit as a starting point for the indirect method and eliminating options for the classification of interest and dividend cash flows.

Learn more in this BDO’s publication .

The release of IFRS 18 is expected in Q2 2024. This new IFRS will be effective from 1 January 2027 with early application permitted.

© 2018-2024 Marek Muc

The information provided on this website is for general information and educational purposes only and should not be used as a substitute for professional advice. Use at your own risk. Excerpts from IFRS Standards come from the Official Journal of the European Union (© European Union, https://eur-lex.europa.eu). You can access full versions of IFRS Standards at shop.ifrs.org. IFRScommunity.com is an independent website and it is not affiliated with, endorsed by, or in any other way associated with the IFRS Foundation. For official information concerning IFRS Standards, visit IFRS.org.

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What Are Financial Statements?

• Their Purpose

Balance Sheet

Income statement, cash flow statement, statement of changes in shareholder equity, statement of comprehensive income, nonprofit financial statements.

• Limitations

The Bottom Line

• Corporate Finance
• Financial statements: Balance, income, cash flow, and equity

Financial Statements: List of Types and How to Read Them

Financial statements are written records that convey the financial activities of a company. Financial statements are often audited by government agencies and accountants to ensure accuracy and for tax, financing, or investing purposes. For-profit primary financial statements include the balance sheet, income statement, statement of cash flow, and statement of changes in equity. Nonprofit entities use a similar but different set of financial statements.

Key Takeaways

• Financial statements provide interested parties with a company's overall financial condition and profitability.
• Statements required by Generally Accepted Accounting Principles are the balance sheet, the income statement, and the statement of cash flows, but you'll likely see more in reports.
• The balance sheet provides an overview of assets, liabilities, and shareholders' equity as a snapshot in time.
• The income statement primarily focuses on a company's revenues and expenses during a particular period. Once expenses are subtracted from revenues, the statement produces a company's profit figure called net income.
• The cash flow statement (CFS) tracks how a company uses its cash to pay its debt obligations and fund its operating expenses and investments.

Investopedia / Julie Bang

Understanding Financial Statements

Investors and financial analysts rely on financial data to analyze a company's performance and make predictions about the future direction of its stock price. One of the most important resources of reliable and audited financial data is the annual report , which contains the firm's financial statements.

The financial statements are used by investors, market analysts, and creditors to evaluate a company's financial health and earnings potential. The three major financial statement reports are the balance sheet, income statement, and statement of cash flows.

Not all financial statements are created equally. The rules used by U.S. companies are called Generally Accepted Accounting Principles, while the rules often used by international companies are International Financial Reporting Standards (IFRS). In addition, U.S. government agencies use a different set of financial reporting rules.

The balance sheet provides an overview of a company's assets, liabilities, and shareholders' equity at a specific time and date. The date at the top of the balance sheet tells you when this snapshot was taken; this is generally the end of its annual reporting period. Below is a breakdown of the items in a balance sheet.

• Cash and cash equivalents  are liquid assets, which may include Treasury bills and certificates of deposit.
• Accounts receivable  are the amount of money owed to the company by its customers for the sale of its products and services.
• Inventory is the goods a company has on hand, intended to be sold as a course of business. Inventory may include finished goods, work in progress that is not yet finished, or raw materials on hand that have yet to be worked.
• Prepaid expenses are costs paid in advance of when they are due. These expenses are recorded as an asset because their value has not yet been recognized; should the benefit not be recognized, the company would theoretically be due a refund.
• Property, plant, and equipment are capital assets owned by a company for its long-term benefit. This includes buildings used for manufacturing or heavy machinery used for processing raw materials.
• Investments are assets held for speculative future growth. These aren't used in operations; they are simply held for capital appreciation.
• Trademarks, patents, goodwill, and other intangible assets can't physically be touched but have future economic (and often long-term benefits) for the company.

Liabilities

• Accounts payable are the bills due as part of a business's operations. This includes utility bills, rent invoices, and obligations to buy raw materials.
• Wages payable are payments due to staff for time worked.
• Notes payable are recorded debt instruments that record official debt agreements, including the payment schedule and amount.
• Dividends  payable are dividends that have been declared to be awarded to shareholders but have not yet been paid.
• Long-term debt can include a variety of obligations, including sinking bond funds, mortgages, or other loans that are due in their entirety in more than one year. Note that the short-term portion of this debt is recorded as a current liability.

Shareholders' Equity

• Shareholders' equity is a company's total assets minus its total liabilities.  Shareholders' equity (also known as stockholders' equity ) represents the amount of money that would be returned to shareholders if all of the assets were liquidated and all debts paid off.
• Retained earnings  are part of shareholders' equity and are the amount of net earnings that were not paid to shareholders as dividends.

Example of a Balance Sheet 

Below is a portion of ExxonMobil Corporation's  (XOM)  balance sheet for fiscal year 2021, reported as of Dec. 31, 2021.

• Total assets were $338.9 billion.
• Total liabilities were $163.2 billion.
• Total equity was $175.7 billion.
• Total liabilities and equity were $338.9 billion, which equals the total assets for the period.

Unlike the balance sheet, the income statement covers a range of time, which is a year for annual financial statements and a quarter for quarterly financial statements. The income statement provides an overview of revenues, expenses, net income, and earnings per share.

Operating revenue is the revenue earned by selling a company's products or services. The  operating revenue for an auto manufacturer would be realized through the production and sale of autos. Operating revenue is generated from the core business activities of a company.

Non-operating revenue is the income earned from non-core business activities. These revenues fall outside the primary function of the business. Some non-operating revenue examples include:

• Interest earned on cash in the bank
• Rental income from a property
• Income from strategic partnerships like royalty payment receipts
• Income from an advertisement display located on the company's property

Other income is the revenue earned from other activities. Other income could include gains from the sale of long-term assets such as land, vehicles, or a subsidiary.

Primary expenses are incurred during the process of earning revenue from the primary activity of the business. Expenses include the cost of goods sold (COGS), selling, general and administrative expenses (SG&A), depreciation or amortization, and research and development (R&D).

Typical expenses include employee wages, sales commissions, and utilities such as electricity and transportation.

Expenses that are linked to secondary activities include interest paid on loans or debt. Losses from the sale of an asset are also recorded as expenses.

The main purpose of the income statement is to convey details of profitability and the financial results of business activities; however, it can be very effective in showing whether sales or revenue is increasing when compared over multiple periods.

Investors can also see how well a company's management is controlling expenses to determine whether a company's efforts in reducing the cost of sales might boost profits over time.

Example of an Income Statement

Below is a portion of ExxonMobil Corporation's income statement for fiscal year 2021, reported as of Dec. 31, 2021.

• Total revenue was $276.7 billion.
• Total costs were $254.4 billion.
• Net income or profit was $23 billion.

The cash flow statement (CFS) shows how cash flows throughout a company. The cash flow statement complements the balance sheet and  income statement .

The CFS allows investors to understand how a company's operations are running, where its money is coming from, and how money is being spent. The CFS also provides insight as to whether a company is on a solid financial footing.

The cash flow statement contains three sections that report on the various activities for which a company uses its cash. Those three components of the CFS are listed below.

Operating Activities 

The operating activities on the CFS include any sources and uses of cash from running the business and selling its products or services. Cash from operations includes any changes made in cash accounts receivable, depreciation, inventory, and  accounts payable . These transactions also include wages, income tax payments, interest payments, rent, and cash receipts from the sale of a product or service.

Investing Activities

Investing activities include any sources and uses of cash from a company's investments in its long-term future. A purchase or sale of an asset, loans made to vendors or received from customers, or any payments related to a merger or acquisition are included in this category.

Also, purchases of fixed assets such as property, plant, and equipment (PPE) are included in this section. In short, changes in equipment, assets, or investments relate to cash from investing.

Financing Activities

Cash from financing activities includes the cash from investors or banks and the cash paid to shareholders. Financing activities include debt issuance, equity issuance, stock repurchases, loans, dividends paid, and debt repayments.

The cash flow statement reconciles the income statement with the balance sheet in three major business activities.

Example of a Cash Flow Statement

Below is a portion of ExxonMobil Corporation's cash flow statement for fiscal year 2021, reported as of Dec. 31, 2021. We can see the three areas of the cash flow statement and their results.

• Operating activities generated a positive cash flow of $48 billion.
• Investing activities generated cash outflows of -$10.2 billion for the period. Additions to property, plant, and equipment made up the majority of cash outflows, which means the company invested in new fixed assets.
• Financing activities generated cash outflows of -$35.4 billion for the period. Reductions in short-term debt and dividends paid out comprised most of the cash outflows.

The statement of changes in equity tracks total equity over time. This information ties back to a balance sheet for the same period; the ending balance on the change of equity statement equals the total equity reported on the balance sheet.

The formula for changes to shareholder equity will vary from company to company; in general, there are a couple of components:

• Beginning equity : This is the equity at the end of the last period that simply rolls to the start of the next period.
• (+) Net income : This is the amount of income the company earned in a given period. The proceeds from operations are automatically recognized as equity in the company, and this income is rolled into retained earnings at year-end.
• (-) Dividends : This is the amount of money that is paid out to shareholders from profits. Instead of keeping all of a company's profits, the company may choose to give some profits away to investors.
• (+/-) Other comprehensive income : This is the period-over-period change in other comprehensive income. Depending on transactions, this figure may be an addition or subtraction from equity.

In ExxonMobil's statement of changes in equity, the company also records activity for acquisitions, dispositions, amortization of stock-based awards, and other financial activities. This information is useful for analyzing how much money is being retained by the company for future growth as opposed to being distributed externally.

An often less utilized financial statement, the statement of comprehensive income summarizes standard net income while also incorporating changes in other comprehensive income (OCI). Other comprehensive income includes all unrealized gains and losses that are not reported on the income statement. This financial statement shows a company's total change in income, even gains and losses that have yet to be recorded in accordance with accounting rules.

Examples of transactions that are reported on the statement of comprehensive income include:

• Net income (from the statement of income)
• Unrealized gains or losses from debt securities
• Unrealized gains or losses from derivative instruments
• Unrealized translation adjustments due to foreign currency
• Unrealized gains or losses from retirement programs

In the example below, ExxonMobil has over $2 billion of net unrecognized income. Instead of reporting just $23.5 billion of net income, ExxonMobil reports nearly $26 billion of total income when considering other comprehensive income.

Nonprofit organizations record financial transactions across a similar set of financial statements. However, due to the differences between a for-profit entity and a purely philanthropic entity, there are differences in the financial statements used. The standard set of financial statements used for a nonprofit entity includes:

• Statement of Financial Position: This is the equivalent of a for-profit entity's balance sheet. The largest difference is nonprofit entities do not have equity positions; any residual balances after all assets have been liquidated and liabilities have been satisfied are called "net assets."
• Statement of Activities: This is the equivalent of a for-profit entity's statement of income. This report tracks the changes in operation over time, including the reporting of donations, grants, event revenue, and expenses to make everything happen.
• Statement of Functional Expenses: This is specific to nonprofit entities. The statement of functional expenses reports expenses by entity function (often broken into administrative, program, or fundraising expenses). This information is distributed to the public to explain what proportion of company-wide expenditures are related directly to the mission.
• Statement of Cash Flow: This is the equivalent of a for-profit entity's statement of cash flow. Though the accounts listed may vary due to the different nature of a nonprofit organization, the statement is still divided into operating, investing, and financing activities.

The purpose of an external auditor is to assess whether an entity's financial statements have been prepared following prevailing accounting rules and whether any material misstatements are impacting the validity of results.

Limitations of Financial Statements

Although financial statements provide a wealth of information on a company, they do have limitations. The statements are often interpreted differently, so investors often draw divergent conclusions about a company's financial performance.

For example, some investors might want stock repurchases , while others might prefer to see that money invested in long-term assets. A company's debt level might be fine for one investor, while another might have concerns about the level of debt for the company.

When analyzing financial statements , it's important to compare multiple periods to determine any trends and compare the company's results to its peers in the same industry.

Lastly, financial statements are only as reliable as the information fed into the reports. Too often, it's been documented that fraudulent financial activity or poor control oversight have led to misstated financial statements intended to mislead users. Even when analyzing audited financial statements, there is a level of trust that users must place in the validity of the report and the figures being shown.

What Are the Main Types of Financial Statements?

The three main types of financial statements are the balance sheet, the income statement, and the cash flow statement. These three statements together show the assets and liabilities of a business, its revenues, and costs, as well as its cash flows from operating, investing, and financing activities.

What Are the Benefits of Financial Statements?

Financial statements show how a business operates. It provides insight into how much and how a business generates revenues, what the cost of doing business is, how efficiently it manages its cash, and what its assets and liabilities are. Financial statements provide all the details on how well or poorly a company manages itself.

How Do You Read Financial Statements?

Financial statements are read in several different ways. First, financial statements can be compared to prior periods to understand changes over time better. Financial statements are also read by comparing the results to competitors or other industry participants. By comparing financial statements to other companies, analysts can get a better sense of which companies are performing the best and which are lagging behind the rest of the industry.

What Is GAAP?

Generally Accepted Accounting Principles (GAAP) are the rules by which publicly-owned United States companies must prepare their financial statements. It is the guideline that explains how to record transactions, when to recognize revenue, and when expenses must be recognized. International companies may use a similar but different set of rules called International Financial Reporting Standards (IFRS).

Financial statements are the ticket to the external evaluation of a company's financial performance. The balance sheet reports a company's financial health through its liquidity and solvency, while the income statement reports its profitability. A statement of cash flow ties these two together by tracking sources and uses of cash. Together, these financial statements attempt to provide a more clear picture of a business's financial standing.

U.S. Securities and Exchange Commission. " Exxon Mobile Corporation Form 10-K for the Fiscal Year Ended Dec. 31, 2021 ."

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10 Slide Ideas for Financial Report Presentation

Last Updated on February 7, 2024 by Anastasia

Working on a company financial report, and want to make it different this time? Financial reviews full of data and analysis are typically difficult to be digested by non-financial audiences, and it can be challenging to communicate the meaning behind the figures. If you want to disclose your quarterly or annual numbers in a simple and understandable way to your key stakeholders, check our blog for examples and inspiration.

A financial report is a management tool used to communicate key financial information to both internal and external stakeholders by covering aspects of financial affairs with the help of KPIs, such as income statements, balance sheets, cash flow, or financial ratios analysis. See how to prepare structured and professional financial slides smoothly using PowerPoint tools.

All graphics examples presented below can be downloaded as an editable source. Explore the Financial Report and Performance Indicators Presentation for PowerPoint.

Get inspired by seven examples of how you can illustrate the components of your financial report and a quick instruction on how you can create a P&L Statement table using simple design tricks.

Visualize your key financial indicators

Such a general slide with a financial summary will help to analyze the big picture and ensure you’re on the same page with the audience.

You can list the common key indicators such as Global Net Revenue, Like for Like Growth, Cash Conversion Cycle, Profit Before Tax. A neutral background picture makes the slide more attractive and circles with highlights on the right help to stay focused on important numbers.

Show revenue and profit snapshot on one dashboard slide

This slide shows how you can summarize net sales and profitability evolution using gauges and a simple bar chart. The dashboard illustrates typical profitability measures: Net Sales, Operating Expenses, EBIDTA, and PBT as easy-to-read gauge charts. The profit growth over the years is shown as a clear bar chart.

Illustrate revenue highlights with clear charts

If you’d like to include additional data, for example, revenue highlights over time or regions, you can do it as on the slides above. The first one presents sales distribution breakdown by months and categories. The second slide example presents sales split by worldwide markets geographies on a world map as light background underlining the location of the markets.

Small elements, like pin icons, doughnut charts, and color-coding will help you add a professional look to your presentation.

Pro tip: To help non-financial people digest the data, keep your slides short, don’t stuff them with jargon words . Use illustrations, and make the most essential data points clearly visible.

Include balance sheet and cash flow tables

The very common problem is the unreadability of massive tables. The balance sheet and cash flow statement will be definitely complex, as you need to squeeze many numbers inside.

Notice how color-coding is used for various table sections, and illustrative symbols, which don’t steal attention from the content, rather nicely add up. A text box aside can be used for your comments or notes.

Compare key drivers of a revenue growth

To illustrate the comparison of several growth drivers, you can apply such stacked bars.

Notice how specific drivers (E-commerce, Emerging Markets, Organic Growth, New Product Lines) are illustrated by corresponding icon symbols, all in one consistent style.

Visualize revenue analysis for each quarter in your financial report

To present an analysis of sales revenue over the year, you can use such a bar chart. It’s slightly enhanced by adding quarter signs over the data chart.

This data chart illustrates revenue analysis split by quarters and channels. If you have some comments or notes you’d like to discuss, we advise putting the most essential point in bold.

Present your financial metrics and indicators as a dashboard grid

Want to go deeper and include the analysis of some ratios? A good idea is to firstly remind your audience what are those indicators and what exactly they show.

If you have more items to show on one slide, it’s good to organize them to some regular grid. Make sure all elements are aligned to make it look professional.

If you have more items to show on one slide, it’s good to organize them to some regular grid.

You can include general definitions and development of key financial ratios e.g. growth, profitability, liquidity, efficiency, solvency, and capital market ratios. On the slide example, you can see the capital market ratios KPI line chart which shows Dividend Yield and P/E Ratio change over the years.

Guide on how to redesign P&L Statement to a stylish table

Here’s a step-by-step guide on how you can create a P&L Statement table using simple shapes, icons, and a few tricks that will save you time.

1. Use simple PowerPoint shapes to create a stylish table design.

2. Adjust your source P&L table to be readable.

The trick is to have enough margin inside the table cell.

3. Enhance the table header

Add ribbon shapes as an additional header row to make the table look nicer.

4. Redesign the first column

You can add stylish arrows in a place of 1st table column.

5. Enrich your table with icons and a background picture.

See the whole instruction and other visual examples here: How to Create an Effective Company Financial Report Using PowerPoint.

Need to prepare a broader annual report and focus on business highlights? See how to create a comprehensive overview of activities using graphs, icons, infographic elements, and data-driven charts in this blog .

Resource: Financial Report and Performance Indicators Presentation

The graphics in this blog are a part of our financial report layouts collection. Our financial review deck incorporates 30 infographics slide templates for a financial summary overview, balance sheets with assets and liabilities, income statement, profit and loss reports, revenue and profit snapshot, cash flow statement, explain types of financial ratios, key growth drivers, or breakdown of your operational expenses.

You can reuse graphs and charts, and tailor them to your needs in order to make your slides clear and easy to understand. See the full deck here:

Financial Report and Performance Indicators PPT Presentation

Using concise, modern images will make your PowerPoint structured and consistent. To make your presentations even more appealing, consider also using this collection of professionally designed diagram layouts .

Home Blog PowerPoint Tutorials How To Create a PowerPoint Presentation of Financial Statements

How To Create a PowerPoint Presentation of Financial Statements

At SlideModel.com we receive several help requests from our users regarding Financial Analysis PowerPoint Presentations, mainly the presentation of Financial Statements data. We have previously wrote about this topic in our post  Financial Statement Templates For PowerPoint Presentations  with the objective to help users summarize relevant data and communicate the important conclusion extracted from the statements. The feedback was positive, but we are still requested to provide some guidelines on detailed statements. For this reason we will walk through our   Financial Statements PowerPoint Template  which provides comprehensive tables that provide higher level of detail. In order to have a higher visual impact and allow the message to engage the audience, the template also provides charts and ratios dashboards that will appeal to executive audiences.

• Financial data is complex
• Concepts are not intuitive
• The understanding and frame of references varies depending the audience.

This facts will drive your consolidated financial statements presentation plan.

The following sections will walk through financial statement presentation examples and will provide insights on how to tackle them.

Balance Sheet

The balance sheet by definition is a financial statement that summarizes an organization assets, liabilities and equity at a specific point of time (a snapshot). This three concepts provide information on what the organization owns, owes and how much was invested (capital).  Applying the facts we described before, Balance Sheet data is complex, so you will try to summarize the data in each section as much as possible, presenting the relevant accounting lines (generally, those associated with Liquidity , Debt and Net Worth ). The Concepts ( Assets , Liabilities and Equity ) are not simple, and when you dive into “liquidity of them”, it starts getting harder. The audience will drive your level of detail, so present a table where the major concepts are clearly highlighted (background colors), with totalizers (use bold for this lines and make sure you point them strongly). Move quickly to the Ratios section if understood, otherwise navigate to a second level of detail, if the audience requests to drill down.

As shown by the orange arrows in the image, the important concepts are highlighted. Again, what will remain in the audience mind is that “you can explain detail if requested”, “you can show the consolidated numbers” and that “you can move to the important topics derived in the relationships of Financial Statements”, the Ratios .

Income Statement

The Income Statement, also known as  “Statement of Incomes” , “Profit & Loss” or just “P&L”, is a financial statement that presents financial performance of an organization over a time period. How does it measures performance ? , summarizing how revenues occur and how expenses were incurred for all the organization activities (operational and non-operational). Also , shows the Net Profit (positive or negative) over the period.

This statement if divided into two sections, operational and non-operational. Operational items are directly related with the organizations core activities in Sales and Cost of Sale. Non Operational Items are expenses the company incurs for administrative , managerial or assets exchange activities.

Differently from the Balance Sheet, the Income Statement represents a period of time and not a snapshot.

When creating an Income Statement Presentation, take into account that what the audience is looking for is How the organization is performing?.  Generally, to show performance, you will need to compare against other period or a benchmark, for that reason each column is a “challenger” for the actual period column. Even though the absolute numbers are important you will need to communicate  the Trend concluded against the original and challengers statements. Highlight the Revenues and the Cost of Sales . Present them in an individual Slide as the “ Operational ” Section of the statement.

The second section of the Income Statement , is the Non-Operational Items, generally called “expenses”. This section shows how the organization management is using money for non operational activities. This section is important when the analysis is centered in improving efficiency. The amount of non-operational items can be huge, so its important you can consolidate into categories. Take your time to exercise this suggestion, otherwise the list will be too long, and will dis-encourage the audience. As a suggestion, keep in mind that this line items are industry dependent. Analyze some examples in your industry to come up with meaningful consolidated categories.

Statement Of Cash Flows

The Statement Of Cash Flows, by definition, is the financial statement that presents all the cash inflows and outflows derived of the operating, financing and investing activities of the organization in a period of time. This financial statement is created by 2 widely used methods, the direct and indirect methods. The main difference is that the direct method uses cashflow records to create the operational items while the indirect method uses  accrual accounting information to present the cash flows from the operations section, deriving them from the net income .Considering that the indirect method is the most popular, we included its table in the template.

This statement must communicate the cash flows through the organization activities and their accounting recognitions. The analysis generally will focus on the sustainability of the operational section, and how much investment and financing is required at the period to keep the business going. If contracts are being recognized as revenue in a period but money is not really reaching the organization, the statement of cashflows will spot this problem and will help managers to take actions over it. With the same reasoning, if net income allows higher cash flow bandwidth in operations, the organization could use fund for repaying debt and diminish the cost of financing.

The Statement of Cash Flows is divided in the three sections mentioned, Operational , Financing and Investing activities. In this template we created one slide for Operations and Finance, a second slide for Investing and a third slide with the subtotals of each activity, showing the total cash flows.

Presenting Trends

As we mentioned before, the important message that need to be presented with the financial statement  is the organizations performance. The best tools for communicating trends, are the charts. In this case the Financial Statements PowerPoint Template Provides three editable examples. We will show how the presenter can edit the charts and present meaningful information derived from the statements.

Income and Expenses Barchart

When reviewing the Income Statement , we explained the importance of the Operational Data versus Non-Operational . The Income and Expenses Chart visually communicate the relationship between this activities and allows the audience to review the trend or evolution, period versus period. This is ideal for spoting efficiency opportunities. The chart has two veritcal axis. The left (or main) axis represents the Operational Income and Net Income. The right axis (or secondary Axis) represents the Sales, Cost of Sales and Expenses. Remember the simple algebra that relates this value:

• Operational Income = Sales – Cost of Sales
• Net Income = Sales – Cost of Sales – Expenses

This example shows that the Net Income increases with time at a higher rate than the operational income. This can be interpreted as that sales improved, and expenses were kept almost similar. This kind of information is the message the presenter need to communicate, and the use of chart will boost the audience retention of the idea.

The chart is created as a PowerPoint chart, so the user will be able to edit it though the “ Edit Data ” Option of the “ Chart Tools > Design ” menu.

Income and Expenses Pie Chart

The other Chart Tool included in the Financial Statement PowerPoint Template is the Discrimination in Revenues and Expenses. This Charts help to transmit the message of revenues streams and expenses items. Ideal to communicate which are the business lines that bring higher revenues to the organization and which are the items were most of the money is being spent. Again, this chart will allow to spot efficiency problems, prioritize business units or cut costs.

Operating Income & Margin

One of the most extensively used key performance indicators in financial statement is the Operating Margin. This indicator derived from the operating revenues and operating costs allows to compare efficiency on the performance of the value proposition delivery. The trends over the operating margin can show problems in costs or problems on value proposition delivery that derive in a lower return. Again, in the sake of providing comparable features, the chart presented uses two vertical axis (primary and secondary). The primary axis (left) represents the Operating Income. The secondary axis (right) represents the Operating Margin. The chart is Data Driven, and editable through Excel.

Financial Statement Ratios

In this section we will show the most popular ratios used in conjunction with the Financial Statements. Following the initial note idea, the aim of the financial statements presentation should not be to repeat numbers and lists, but to communicate conclusions of the information hidden behind them . With this objective in mind is that executives decided to move into ratio analysis instead of financial statements analysis, basically because a summarized indicator ( KPI ) that relates specific data, provides enough information for decision making process, without the need of extensive analysis.

Liquidity Ratios

The liquidity ratios,by definition, are key performance indicators of the organization  to determine  it’s ability to pay off its short-terms debts obligations. They are created with information derived from the Balance Sheet (so they represent a snapshot). In the Financial Statement PowerPoint Template we created gauges indicators with categories from Best to Worse. The presentar can edit and manipulate this shapes as the are 100% fully editable . The indicators selected are:

• Current Ratio : also known as Working Capital Position.
• Quick Ratio : also known as Acid Test Ratio
• Net Working Capital Ratio

Profitability Ratios

Organizations Financial Performance can be interpreted from different angles, some times, growth is more importante than being “more” profitable, but almost all the times executives need to compare profitability between periods, to understand the impact of strategic decisions over the amount of money left for the organization and stakeholders.

For this ratios we prepared an alternative Gauge design,  modern and without classification over the values.

The ratios presented are:

• Return on Assets (ROA)
• Return on Equity (ROE)
• Profit Margin

Capital Structure Ratios

The Capital Structure  is how an organization finances its overall operations and growth by using different sources of funds. The Ratios on this sections allows the presenter to communicate this relationships. In this case instead of gauge like indicators, we used Editable Donut Charts.

• Assets Turnover Ratio
• Accounts Receivable Turnover Ratio
• Inventories Turnover Ratio

Debt Equity Ratios

The debt equity ratios show how the organization uses debt and equity to finace assets and operations.

• Debt to Equity Ratio
• Interest Coverage Ratio

Creating Consolidated Financial Statements PowerPoint Presentations can be a tough job. The presenter needs to evaluate the complexity of the data, the depth to be shown and the audience that will assist the presentation. Tools like charts and dashboard will help the presenter to summarize relevant information and communicate quicker, the important facts. The use of Financial Ratios is fundamental for a successful message.

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Balance, Cash Flow, Dashboard, Financial, Gauge, Income, Ratios, Sheet, Statement, Tables Filed under PowerPoint Tutorials

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The International Accounting Standards Board (IASB) today completed its work to improve the usefulness of information presented and disclosed in financial statements. The new Standard, IFRS 18 Presentation and Disclosure in Financial Statements , will give investors more transparent and comparable information about companies’ financial performance, thereby enabling better investment decisions. It will affect all companies using IFRS Accounting Standards.

IFRS 18 introduces three sets of new requirements to improve companies’ reporting of financial performance and give investors a better basis for analysing and comparing companies:

Improved comparability in the statement of profit or loss (income statement)

Currently there is no specified structure for the income statement. Companies choose their own subtotals to include. Often companies report an operating profit but the way operating profit is calculated varies from company to company, reducing comparability. 1

IFRS 18 introduces three defined categories for income and expenses—operating, investing and financing—to improve the structure of the income statement, and requires all companies to provide new defined subtotals, including operating profit. The improved structure and new subtotals will give investors a consistent starting point for analysing companies’ performance and make it easier to compare companies.

Enhanced transparency of management-defined performance measures

Many companies provide company-specific measures, often referred to as alternative performance measures. Investors find this information useful. However, most companies don’t currently provide enough information to enable investors to understand how these measures are calculated and how they relate to the required measures in the income statement.

IFRS 18 therefore requires companies to disclose explanations of those company-specific measures that are related to the income statement, referred to as management-defined performance measures. The new requirements will improve the discipline and transparency of management-defined performance measures, and make them subject to audit.

More useful grouping of information in the financial statements

Investor analysis of companies’ performance is hampered if the information provided by companies is too summarised or too detailed. IFRS 18 sets out enhanced guidance on how to organise information and whether to provide it in the primary financial statements 2 or in the notes. The changes are expected to provide more detailed and useful information. IFRS 18 also requires companies to provide more transparency about operating expenses, helping investors to find and understand the information they need.

Andreas Barckow, IASB Chair, said:

IFRS 18 represents the most significant change to companies’ presentation of financial performance since IFRS Accounting Standards were introduced more than 20 years ago. It will give investors better information about companies’ financial performance and consistent anchor points for their analysis.

IFRS 18 is effective for annual reporting periods beginning on or after 1 January 2027, but companies can apply it earlier. Changes in companies’ reporting resulting from IFRS 18 will depend on their current reporting practices and IT systems.

IFRS 18 replaces IAS 1 Presentation of Financial Statements . It carries forward many requirements from IAS 1 unchanged. IFRS 18 is the culmination of the IASB’s Primary Financial Statements project. 

Access the Standard

IFRS 18, the Illustrative Examples and the Basis for Conclusions are available to IFRS Digital subscribers. You can purchase an IFRS Digital Subscription or a PDF version of the Standard from our web shop.

• IFRS 18  Presentation and Disclosure in Financial Statements
• Basis for Conclusions —explanation of the IASB’s considerations in developing the requirements in IFRS 18
• Illustrative Examples —worked examples for aspects of IFRS 18, including flowcharts relating to key requirements in IFRS 18

Access the supporting materials

Support to implement IFRS 18 will be available via the IFRS 18 implementation webpage .

The following documents, along with IFRS 18, are available from the completed project page :

• Short video of IASB Chair Andreas Barckow summarising the new requirements
• One-page quick view of IFRS 18
• Project Summary —overview of the project in non-technical language
• Effects Analysis —description of the likely benefits and costs of IFRS 18
• Feedback Statement —summary of feedback on proposals and the IASB’s response to feedback
• Reference materials —comparison table of requirements in IAS 1 and IFRS 18 showing changes to each paragraph of IAS 1

Watch Andreas Barckow explain the new requirements to improve companies’ financial performance reporting.

1 An IASB study of 100 companies showed that over 60 reported a figure for operating profit, using at least nine different ways to calculate it.

2 The primary financial statements consist of the statement of profit or loss (income statement); statement presenting comprehensive income; statement of financial position (balance sheet); statement of changes in equity; and statement of cash flows.

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