The Three Key

Financial Statements

The financial statements are a record of the financial activities of a business.


Balance sheet

Statement of financial position

Total Assets


Current assets

e.g. cash, inventory, accounts receivable


Non-current assets

e.g. property, plant and equipment, technology, patents, trademarks

  1. Tangible

  2. Intangible


Total Liabilities and Equity


Current liabilities

e.g. accounts payable


Non-current liabilities

e.g. long-term debt


Shareholders’ equity

e.g. common shares and retained earnings


Income Statement

Statement of Profit and Loss

Revenues


Direct operating cost

e.g. Cost of goods sold


Gross profit


Indirect operating cost

e.g. R&D, administration, selling, distribution


Operating income = Earnings Before Interest and Taxes


Cost of debt financing

e.g. Interest, bank charges


Tax


Net income


Cash Flow Statement

Cash flows from OPERATING ACTIVITIES

e.g. revenues, operating expenses

Operating cash flows

Cash flows from INVESTING ACTIVITIES

e.g. sale/purchase of assets

Cash before financing

Cash flows from FINANCING ACTIVITIES

e.g. issuing shares, raising debt

Net cash movement


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