March 3, 2022

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The Complete Guide to Financial Statements and How to Navigate Them

What is a Financial Statement?

A financial statement data is a document that provides an overview of a company’s financial performance. Financial statements are usually composed of three sections: the balance sheet, the income statement, and the cash flow statement.

The balance sheet displays all of the assets and liabilities that a company has on its books. The income statement shows how much money a company made or lost over a specific period of time. And finally, the cash flow statement shows how much money came into or went out of the business during that same time period.

What Are the Purposes of Financial Statements

Financial statements are a set of documents that provide information about the financial performance of a company. They are used by stakeholders to assess the financial condition of a company.

The purpose of financial statements is to provide information about the company’s income, expenses, assets, liabilities and its equity. These are usually presented in three sections: income statement, balance sheet and cash flow statement.

Purposes: Financial statements provide information about the company’s income, expenses, assets, liabilities and its equity. These are usually presented in three sections: Income Statement, Balance Sheet and Cash Flow Statement.

What is the Difference Between Accounting & Finance?

Accounting is a profession concerned with the process of recording, classifying, and summarizing business transactions and financial information to prepare financial statements.

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Finance is the study of investments. It includes banking, investment management, and other areas such as insurance.

Methods of Pulling Financial Statements

Financial statements can be pulled from a variety of sources. They can be pulled from a company’s website, they can be pulled from the company’s financial reports, or they can be pulled from a financial database.

The following list is not exhaustive but it does provide examples of where to find some financial statements:

– The company’s website: A company will typically have its annual report on its website and this is usually the best place to find the most recent quarterly report as well. Some companies will also have their 10-Ks and 10-Qs on their websites as well.

– The company’s financial reports: A company may also publish its quarterly reports, annual reports, and other securities filings in places like the Securities and Exchange Commission site or on Edgar

Breakdown of the Components on an Income Statement

The income statement is a financial document that shows how much money a company has made or lost over a specified time period. This time period can be in months, quarters, or years. The income statement breaks down the revenue and expenses into four sections:

1) Gross Revenue:

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2) Operating Expenses:

3) Net Income:

4) Cash Flows from Operations:

5) Non-cash Items on the Income Statement:

6) Non-operating Items on the Income Statement:

Breakdown of the Components on a Balance Sheet

A balance sheet shows the financial position of a business at a certain point in time. It lists the assets, liabilities and net worth of the business.

The balance sheet is divided into two parts:

1) Assets – what a company owns or owes

2) Liabilities – what a company owes to others

The following are examples for assets: cash, investments, inventory, equipment and buildings. The following are examples for liabilities: bank loans, accounts payable, payroll taxes and accounts receivable. Net worth is calculated by subtracting the total liabilities from the total assets.

 


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