FINANCIAL STATEMENTS
WHAT IS A FINANCIAL
STATEMENT?
Records that outline the financial activities of a business, an individual
or any other entity. Financial statements are meant to present the
financial information of the entity in question as clearly and concisely
as possible for both the entity and for readers. Financial statements for
businesses usually include: income statements, balance sheet, statements of
retained earnings and cash flows, as well as other possible statements. -investopedia.com
BALANCE SHEET
A financial statement that summarizes a company's
assets, liabilities and shareholders' equity at a
specific point in time.
These three balance sheet segments give investors
an idea as to what the company owns and owes,
as well as the amount invested by the shareholders.
The balance sheet must follow the following
formula:
Assets = Liabilities + Shareholders' Equity
-investopedia.com
INCOME STATEMENT
A financial statement that measures a
company's financial performance over a
specific accounting period. Financial
performance is assessed by giving a
summary of how the business incurs its
revenues and expenses through both
operating and non-operating activities.
It also shows the net profit or loss
incurred over a specific accounting
period, typically over a fiscal quarter
or year. Also known as the "profit and loss
statement" or "statement of revenue and
expense.” -investopedia.com
FINANCIAL RATIOS
Financial performance ratios are comparisons of a company’s financial elements that indicate how
well the business is performing.
Current Ratio
Current assets compared to current liabilities.
Return on Equity Ratio
The net profit of the business compared
to the amount of owners’ equity
Debt to Equity Ratio
The company’s liabilities divided by the
owners’ equity ratio
Net Income Ratio
The total sales compared to the net income
for a period such as six months or one year
THE END