Microsoft Office Tutorials and References
In Depth Information
Many companies use Excel to evaluate their financial health and report financial results. Financial statements
and financial ratios are two types of analyses a company can use to accomplish those goals. Excel is well suited
for financial statements because its grid layout allows for easy adjustment of columns. Ratios are simple finan-
cial calculations — something Excel was designed for.
Basic financial statements
Financial statements summarize the financial transactions of a business. The two primary financial statements
are the balance sheet and the income statement:
• The balance sheet reports the state of a company at a particular moment in time. It shows
• Assets: What the company owns
• Liabilities: What the company owes
• Equity: What the company is worth
• The income statement summarizes the transactions of a company over a certain period of time, such as a
month, quarter, or year.
A typical income statement reports the sales, costs, and net income (or loss) of the company.
Converting trial balances
Most accounting software will produce financial statements for you. However, many of those applications do
not give you the flexibility and formatting options that you have in Excel. One way to produce your own finan-
cial statements is to export the trial balance from your accounting software package and use Excel to summarize
the transactions for you. Figure 13-9 shows part of a trial balance, which lists all the accounts and their bal-