How to Generate Financial Statements in Excel?

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`In this article, I will try to give a complete overview of preparing financial statements in Excel. It includes the preparation method of a balance sheet, income statement, and cash flow statement.

Financial statements are basically reports that provide a complete overview of a company’s financial position and performance over a certain period. In order to assess the financial performance of a company and take steps regarding the company’s future, financial statements in Excel play a vital role.

Here, we will try to generate a complete financial statement with details. At first, we will calculate a balance sheet with assets, liabilities, and owner’s equity. Next, we will calculate the income statement and cash flow statement as parts of the financial statements.

Financial Statements in Excel

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What is Financial Statement in Excel?

Financial Statements are nothing but summary reports which contain the state of the financial situation of a company or organization. They include all the finance-related documents or records of the company throughout the year.

There are 3 main parts of a financial statement:

1. Balance Sheet, which comprises Assets, Liabilities, and Owner’s Equity.

Creating a Complete balance Sheet

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2. Income Statement, which includes Revenue, Expense, and Profits.

Net profit Calculation

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3. Cash Flow Statement, which comprises of Operations, Investment Activity, and Financing Activity.

Total Cash Flow

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How to Generate Financial Statements in Excel

The complete financial statements generation process is divided into three small parts.


Creating Balance Sheet

To create a Balance Sheet, we need to calculate the net balance. We can calculate the Net Balance with the following formula.

Balance = Assets – Total Liabilities – Owner’s Equity

Assets Calculation

  • Use the SUM function to calculate the Total Current Assets, Total Fixed Assets, and Total Other Assets.
  • Then, calculate the Total Assets by adding them up.

Calculating Total Assets to Create Financial Statements in Excel


Liabilities and Owner’s Equity Calculation

  • Next, insert the values of current and long-term liabilities to calculate the total of them.
  • Similarly, calculate the Total Owner’s Equity.
Calculating Liabilities and Owner's Equity to Create Financial Statements in Excel

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Calculate Balance Amount

  • Now calculate the Total Liabilities and Owner’s Equity and subtract it from the Total Assets to have the net balance.
Creating a Complete balance Sheet

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Generating Income Statement Sheet

The Income Statement Sheet defines the net income by subtracting all the expenses from the total revenue.

Calculating Total Revenue

  • Calculate the gross revenue by subtracting the total cost of goods from the net sales.

Calculating Total Revenue


Evaluating Total Operating Expenses

  • Add all the relevant operational costs to calculate the Total Operating Expenses.

Calculating Operating Expenses


Calculating Net Profit

  • Consider all the additional items, like income from continuing operations and non-recurring events, and use all of them to calculate the net profit.
Net profit Calculation

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Creating Cash Flow Statement Sheet

As “Cash Flow Statement” is a fundamental part of the financial statement, we will calculate the cash flow statement in a sheet.

Calculating Net Cash Flow of Operations

  • Calculate the net cash flow of operations by considering the cash received from the clients or many other sources and cash be paid for many reasons like inventory, salary, administrative expenses, interest, expenses, etc.

Calculating Net Cash Flow of Operations


Estimating Net Cash Flow of Investment Activity

  • Take into account the items relevant to the assets of the company like properties, machinery, loans, investment securities, etc., and calculate the net cash flow of investment activity.

Calculating Net Cash Flow of Investment Activity


Calculating Net Cash Flow of Financial Activity

  • Calculate the net cash flow of financial activity, including items related to the financial matters of the company like stock issuance, borrowings, dividends, etc.

Calculating Net Cash Flow of Financial Activity

  • Finally, add up all the net cash flows to have the total net cash flow.
Final Output Total Cash Flow Statement

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What Things Should You Remember?

  • Format the data properly and maintain consistency and clarity.
  • Carefully review all the formulas before finalizing the financial statement.
  • Try to add meaningful labels and headings so the statements look descriptive to the user. It also makes them easier to understand for future uses.

Frequently Asked Questions

1. What are the 5 financial statements?

There are 5 basic types of financial statements in business. They are balance sheet, income statement, cash flow statement, statement of changes in capital, and notes to financial statements.

2. Does Excel have a financial statement template?

Yes, there are many built-in financial statement templates in Excel. Just search for the the template from the File tab and pick your desired one.

3. What is the formula for net income?

The formula we use to calculate the net income is:

Net Income = Total Revenues – Total Expenses

Conclusion

In this article, I have tried to give a complete overview of preparing financial statements in Excel. I hope you have gathered a clear vision of the process of creating a balance sheet, income statement, and cash flow statement as they are the main parts of the financial statements. I hope this article will be helpful for you. For any further questions, please comment below. You can also visit our site for more Excel-related articles.


How to Create Financial Statements in Excel: Knowledge Hub


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Naimul Hasan Arif
Naimul Hasan Arif

Naimul Hasan Arif, a BUET graduate in Naval Architecture and Marine Engineering, has been contributing to the ExcelDemy project for nearly two years. Currently serving as an Excel and VBA Content Developer, Arif has written more than 120 articles and has also provided user support through comments His expertise lies in Microsoft Office Suite, VBA and he thrives on learning new aspects of data analysis. Arif's dedication to the ExcelDemy project is reflected in his consistent contributions and... Read Full Bio

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