"Financial statements (or financial reports) are formal records of the financial activities and position of a business, person, or other entity."
Understanding financial statements is fundamental to personal and business financial management. This topic includes an understanding of the balance sheet, income statement, and statement of cash flows.
Financial Statements: An overview of financial statements such as Balance Sheet, Income Statement, and Cash Flow Statement and their importance in understanding the financial health of a company.
Accounting Principles: Understanding of accounting principles such as accrual-based accounting and their impact on financial statements.
Financial Ratio Analysis: Understanding common financial ratios such as liquidity ratios, profitability ratios, and solvency ratios, and how they can be used to evaluate a company's financial performance.
Income Statement Analysis: Understanding the components of the income statement such as revenue, cost of goods sold, and operating expenses, and how they relate to a company's profitability.
Balance Sheet Analysis: Understanding the components of the balance sheet such as assets, liabilities, and equity, and how they relate to a company's financial position.
Cash Flow Statement Analysis: Understanding the components of the cash flow statement such as operating activities, investing activities, and financing activities, and how they relate to a company's ability to generate cash.
Financial Statement Forecasting: Understanding the different methods of forecasting financial statements and their importance in financial decision-making.
Financial Statement Interpretation: Understanding how to interpret financial statements and use them for decision-making, such as evaluating investment opportunities or assessing a company's financial health.
Consolidated Financial Statements: Understanding how to analyze and interpret financial statements for companies that have subsidiaries and report consolidated financial statements.
International Financial Reporting Standards: Understanding the unique features of financial reporting in various jurisdictions and the International Financial Reporting Standards (IFRS) that are widely accepted globally.
Footnotes and Disclosures: Understanding the importance of footnotes and disclosures in financial statements when assessing the quality and reliability of financial statements.
Auditing Standards: Understanding the role of auditing standards in ensuring the accuracy and reliability of financial statements.
Financial Statement Analysis Software: Understanding the various software tools available for financial statement analysis and how they can be used to streamline financial analysis processes.
Data Analytics in Financial Statement Analysis: Understanding the role of data analytics in financial statement analysis and how to use it to enhance financial analysis processes.
Business Valuation: Understanding how financial statement analysis is an essential part of business valuation and how to employ it in valuing a business.
Income Statement: It shows the revenues, expenses, and net income or loss of a company over a specific period of time.
Balance Sheet: It provides a snapshot of a company’s financial position by summarizing its assets, liabilities, and equity at a specific point in time.
Cash Flow Statement: It tracks the inflows and outflows of cash in a company over a specific period of time, showing how changes in balance sheet accounts affect a company’s cash and cash equivalents.
Statement of Changes in Equity: This statement summarizes the changes in equity of a company over a specific period of time, showing the shareholders' contributions, retained earnings, and changes in other comprehensive income.
Footnotes and supplements to financial statements: These are notes and explanations that accompany the main financial statements to provide additional information and details about specific items or events.
Management Discussion and Analysis (MD&A): This is a section of the annual report that provides management's commentary on the company's financial results and its objectives for the future.
Auditor's Report: It is a report prepared by an independent auditor that includes observations about the accuracy and reliability of a company's financial statements.
Financial statements for non-profit organizations: These include income statements, balance sheets and cash flow statements for non-profit organizations, which contain different information and may not have a profit motive.
Governmental Financial Statements: These statements are for government entities and provide information about their finances and budgets. It includes a Statement of Net Position, a Statement of Revenues, Expenditures, and Changes in Fund Balances, and a Statement of Cash Flows.
"Relevant financial information is presented in a structured manner and in a form which is easy to understand."
"They typically include four basic financial statements accompanied by a management discussion and analysis."
"A balance sheet or statement of financial position reports on a company's assets, liabilities, and owners equity at a given point in time."
"An income statement reports on a company's income, expenses, and profits over a stated period."
"A profit and loss statement provides information on the operation of the enterprise. These include sales and the various expenses incurred during the stated period."
"A statement of changes in equity reports on the changes in equity of the company over a stated period."
"A cash flow statement reports on a company's cash flow activities, particularly its operating, investing and financing activities over a stated period."
"Notably, a balance sheet represents a single point in time, whereas the income statement, the statement of changes in equity, and the cash flow statement each represent activities over a stated period."
"For large corporations, these statements may be complex and may include an extensive set of footnotes to the financial statements and management discussion and analysis."
"The notes typically describe each item on the balance sheet, income statement, and cash flow statement in further detail."
"Notes to financial statements are considered an integral part of the financial statements."
"Relevant financial information is presented in a structured manner and in a form which is easy to understand."
"A cash flow statement reports on a company's cash flow activities, particularly its operating, investing and financing activities over a stated period."
"They typically include four basic financial statements accompanied by a management discussion and analysis."
"An income statement reports on a company's income, expenses, and profits over a stated period."
"Financial statements (or financial reports) are formal records of the financial activities and position of a business, person, or other entity."
"A statement of changes in equity reports on the changes in equity of the company over a stated period."
"A balance sheet represents a single point in time, whereas the income statement, the statement of changes in equity, and the cash flow statement each represent activities over a stated period."
"For large corporations, these statements may be complex and may include an extensive set of footnotes to the financial statements and management discussion and analysis."