1. 1. Introduction to financial statements John Killeen
2. 2. What are they? Income statement Balance Sheet Statement of cash flow
3. 3. Who might use them? Owners of business Governments Investors Lenders
4. 4. How are they used? An owner of business might use statements to determine how they are doing A government wants to know so they can charge taxes
5. 5. How are they used? An investor might want to know how (and if!) they are making money A lender will want to know if the borrower will be able to pay back interest and the principal
6. 6. Income statement An income statement is a picture of the sales, expenses, and net income (or loss) in a given time period. Revenues/Sales $ 10.00 What comes in/what is sold Expenses $ 5.00 All expenses needed to crerate the sale Net $ 5.00 What is leftover
7. 7. Balance Sheet A Balance sheet reveals what a company has, owes, and what a company is worth (On paper) The Wall Street MBA Rueben Advani Assets=Liabilities Plus owners equity
8. 8. Statement of Cash Flows This SCF shows the actual cash coming in and going out of a firm in a given time. It breaks out the cash flows by type: Cash from Operations Cash from Financing Cash from Investing
9. 9. Accounting Accounting standards are important to everyone uses the same norms to report the business activities G.A.A.P. stands for Generally accepted accounting practices and companies that claim they are doing this are committing to being consistent with the industry
10. 10. Numbers The numbers we see driven from accounting allow us to make financial decisions and actually Manage the Finances of the business
11. 11. Conclusion Statements are used by many stakeholders We can arrive at different conclusions They are a starting point for further analysis