Financial statements are like the financial dashboard of your business. Financial statements are reports that summarize important financial accounting information about your business. There are three main types of financial statements: the balance sheet, income statement, and cash flow statement. A balance sheet is a snapshot of your business Masimo Tv Company as it currently stands.

It tells you about the assets you own, and liabilities i. How often your bookkeeper prepares a balance sheet for you will depend on your business. Some businesses get daily or monthly financial statements, some prepare financial statements quarterly, and some only get a balance sheet once a year. For example, banks move a lot of money, so they prepare a balance sheet every day.

On the other hand, a small Etsy shop might only get a balance sheet How To Understand Company Financial Statements three months. But total assets can also include things like equipment, furniture, land, buildings, notes receivable, and even intangible property such as patents and goodwill. Liabilities are debts you owe to other people. On our balance sheet example above, the only liability is a bank loan.

But total liabilities can also include credit card debt, mortgages, and accrued expenses such as utilities, taxes, or wages owed to employees. Equity is the remaining value of the company after subtracting liabilities from assets. This might be retained revenue—money the company has earned to date—as in the example above. This is a way some business owners choose to pay themselves. To put it simply: Whatever value equity your business actually has consists of what it owns assets minus what it owes liabilities.

It shows you how much you made revenue and how much you spent expenses. Cost of Goods Sold COGS : the total amount it cost you to make the popsicles: popsicle sticks, locally-sourced ingredients, etc.

When you subtract the COGS from revenue, you see just how profitable your products are. This is very useful. In the above example, the revenue is about 10x the COGS, which is a healthy gross profit margin. You could be making a killing on every popsicle, but spending so much on advertising that you walk away with nothing.

What else? There are two expenses here besides interest expense: electricity and maintenance. You get those from the balance sheet. But depending on how you do your financial reporting, you may need a third type of statement. The cash flow statement tells you how much cash entered and left your business over a particular time period.

Cash flow statements also known as the statement of cash flows are typically only prepared for companies that use the accrual accounting method. Cash Flows from Operations. This is what you make and spend in the normal course of doing business. Cash Flow from Threes Company Sexy Activities. This is money you invest—in this case, by purchasing new equipment for your business. Cash Flow from Financing Activities.

This includes money the owner invested in the business, as well as taking out and repaying loans. The cash flow statement tells you how much cash you collected and paid out over the year. In either case, your cash flow statement has shown you a different side of your business—the cash flow side, which is invisible on your balance sheets and income statements.

Once you get used to reading financial statements, they can actually be fun. One person can only serve so many popsicles. The line at your cart grows so How To Understand Company Financial Statements some days, people get frustrated and leave before they even buy one of your popsicles.

At this point, it may make sense to hire a second seasonal employee and get a bigger cart. But you need a loan in order to do that. Finally, without properly prepared Walson And Company Jewelry statements, filing your taxes can be a nightmare.

By carefully collecting data and crunching the numbers, you can prepare your own financial statements. An experienced bookkeeper can prepare your financial statements for you, so you can make smart financial decisions without all the tedious paperwork. Check out Bench. This post is to be used for informational purposes only and does not constitute legal, business, or tax advice.

Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Bench assumes no liability for actions taken in reliance upon the information contained herein. Sign up for a trial of Bench. No pressure, no credit card required. How it Works. For Accountants.

Contents What are financial statements? The balance sheet Using the balance sheet in real life The income statement Olds Instrument Company the income statement in real life The cash flow statement Using the cash flow statement in real life Using financial statements to grow your business Bottom line. Tired of doing your own books?

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Guide to Understanding Financial Statements

Nov 20, 2019 · Many of the financial statements you need to understand a company are contained in its annual report. If you're considering buying stock in a company, you can request the annual report for free. As opposed to the 10K filings (see below), annual reports are often easier for ……

Financial statement - Wikipedia

Financial statements (or financial reports) are formal records of the financial activities and position of a business, person, or other entity. Relevant financial information is presented in a structured manner and in a form which is easy to understand.…