What is Financial Reporting? Definition & Importance

Financial reporting helps both internal leaders and external stakeholders understand the financial state of a business. Additionally, private businesses use financial reports when seeking loans from a bank, investment from a venture capital firm or equity funding. Financial reports typically include the balance sheet, the income statement and the cash flow statement, but some businesses also include an annual report composed of financial statements and more detailed information about yearly performance. Overall, financial reporting helps leaders monitor income and expenses, ensures compliance and supports deeper financial analysis.


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