Financial statement. Financial statements are a collection of summary level reports about an organizations financial results financial position and cash flows. A complete set of financial statements is used to give readers an overview of the financial results and condition of a business. Summary report that shows how a firm has used the funds entrusted to it by its stockholders shareholders and lenders and what is its current financial positionthe three basic financial statements are the 1 balance sheet which shows firms assets liabilities and net worth on a stated date.
Understanding these business financial statements is the first critical step investors creditors and you can take to learning about a companys earnings profitability asset management financial leverage cash flow and current shareholders stake. They are useful for the following reasons. Financial statements or financial reports are formal records of the financial activities and position of a business person or other entity.
2 income statement also called profit loss account which shows how the net income of the. If you can follow a recipe or apply for a loan you can learn basic accounting. Relevant financial information is presented in a structured manner and in a form which is easy to understand.
The main task of an analyst is to perform an extensive analysis of financial statements three financial statements the three financial statements are the income statement the balance sheet and the statement of cash flows. Financial statements are written records that convey the financial activities and conditions of a business or entity and consist of four major components. You may apply for an extension of credit individually or jointly with another applicant.
The financial statements are comprised of four basic reports which are as follows. Guide to financial statement analysis. To determine the ability of a business to generate cash and the sources and uses of that cash.
If you can read a nutrition label or a baseball box score you can learn to read basic financial statements.