Let’s look at each of the first three financial statements in more detail.Ī balance sheet provides detailed information about a company’s assets, liabilities and shareholders’ equity.Īssets are things that a company owns that have value. The fourth financial statement, called a “statement of shareholders’ equity,” shows changes in the interests of the company’s shareholders over time. Cash flow statements show the exchange of money between a company and the outside world also over a period of time. Income statements show how much money a company made and spent over a period of time. Balance sheets show what a company owns and what it owes at a fixed point in time. They are: (1) balance sheets (2) income statements (3) cash flow statements and (4) statements of shareholders’ equity. There are four main financial statements. They show you where a company’s money came from, where it went, and where it is now.
We all remember Cuba Gooding Jr.’s immortal line from the movie Jerry Maguire, “Show me the money!” Well, that’s what financial statements do. Let’s begin by looking at what financial statements do. It will not train you to be an accountant (just as a CPR course will not make you a cardiac doctor), but it should give you the confidence to be able to look at a set of financial statements and make sense of them.
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Just as a CPR class teaches you how to perform the basics of cardiac pulmonary resuscitation, this brochure will explain how to read the basic parts of a financial statement. This brochure is designed to help you gain a basic understanding of how to read financial statements. The basics aren’t difficult and they aren’t rocket science. If you can follow a recipe or apply for a loan, you can learn basic accounting. If you can read a nutrition label or a baseball box score, you can learn to read basic financial statements.
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