Financial Documents Flashcards
What is a balance sheet?
A financial statement that reports a company’s assets, liabilities and shareholder equity.
What does a balance sheet tell you?
Assets = Liabilites + Shareholders’ Equity. It shows a company what it owes, and owns and how much shareholders have invested.
What is an income statement
A income statement that shows a company’s financial performance during a particular period.
Why are income statements useful
The main purpose of an income statement is to give details of profitability and business activities of the company to the stakeholders. Management can make decisions based on income statements and can help management expand, push sales, or expand production.
What is a cash flow statement
A cash flow statement provides data regarding all cash inflows a company receives from its ongoing operations and external investment sources. The statement includes cash made by the business eg operations, investments, and financing.
Why is a cash flow statement important
The cash flow statement is important because it helps untreated parties gain insight into all transactions that go through a company, (investors who are interested).
