Financial reporting plays an integral role in running a successful business and helping key decision-makers make informed decisions. One important aspect of financial reporting is the executive summary for financial analysis. Executive summaries provide insight into the company’s performance and whether it’s on track to reach its goals.

What Is an Executive Summary?

An executive summary provides a high-level look at a business for the reporting period. It sums up the most important data in the report, but it can also include information about:

  • Long-term company goals;
  • Short-term objectives;

Executive summaries are often added to financial reporting packages to give readers a brief look at the company’s current and future plans.

An executive summary will typically include metrics from the companies:

  • Balance sheet;
  • Income statement;
  • Financial ratios;

The financial ratios draw attention to and help the reader understand which areas of the business are doing well and which ones need improvement. Summaries are brief and filter data down to only the most relevant and important metrics.

Why Do We Need an Executive Summary, And What Is It For?

As a form of internal reporting, a financial analysis executive summary plays an important role in a company’s decision-making process. Managers and other decision-makers can use these summaries to steer the company in the right direction.

The data contained in the executive summary also highlights key areas of the business that need improvement and which areas are working well. When an executive summary is well-designed and follows the best practices, it allows key decision-makers to understand where the company stands financially and in respect of its goals. If the company is not on the right track to achieving its objectives, the report’s executive summary will show this, and leaders can take action.

Executive summaries are typically read by individuals who do not need to read the entire financial report and just want a quick overview of where the company stands. Readers can include:

  • Management (decision-makers);
  • Project stakeholders;
  • Venture capitalists;
  • Investors;
  • C-level executives;

When writing an executive summary, it’s important to keep the audience in mind to ensure that data is conveyed as concisely and clearly as possible.

Common Mistakes with Executive Summaries

When creating a financial summary report, it’s essential to follow the best financial reporting practices and to be as concise as possible. To provide the most value with your summary, it’s important to avoid making these common mistakes:

Not Making the Data Easily Digestible

Even if you cover the most important data points and present your information clearly, your summary is useless if the reader cannot understand it.

When creating an executive summary, it’s essential to:

  • Clearly label all components of the chart;
  • Ensure all figures are cohesive;
  • Ensure related figures are presented in close proximity;

Avoiding this crucial mistake will ensure that readers understand and find value in your summaries.

Not Speaking to Your Audience

When creating executive summaries, it’s important to remember that different departments will want to focus on different data points and metrics. The marketing department, for example, may want to see data on the company’s monthly recurring revenue and marketing spending. Executives, on the other hand, will want to see other data. Failing to tailor your summary to your audience will make your reports less valuable to each department.

Providing Too Much Information

Executive summaries are meant to be clear and concise. Providing too much information defeats the purpose. Make sure that you’re filtering the data down to key bullet points and only providing key data points. For example, you can present summarized P&L lines as a bar chart that includes only relevant and important KPIs.

It is crucial to make executive summaries that are as brief as possible while still providing all valuable and relevant data.

Only Focusing on Historical Data

One common mistake with executive summaries is only focusing on historical data. Yes, it’s important to present the actual figures, but it’s equally important to show the forecasted figures.

Forecasted figures allow decision-makers to see whether the company is projected to meet its short- and mid-term goals. The summary should give readers a complete picture of the business so that they can make informed decisions.

How To Write an Executive Summary Report?

An executive summary of a report should include a few components, and these components will depend on the audience and what is included in the rest of the financial report.

Some of the main elements of an executive summary report include:

  • Summary graph;
  • Income statement;
  • Cash metrics;
  • Headcount;

You can add other relevant KPIs as needed, such as cash flow for QuickBooks. The summary should also have a clear conclusion that summarizes the data once again. Be sure to recap any issues that need addressing and the most important KPIs from the report. Ideally, your summary will condense the entire report into just a few pages to make it easily digestible for readers.