Reviews and Information on High Performace Truck Parts and Engines

Author Archive

What is a financial statement? In layman’s term, financial statement shows you where a company’s money came from, where it went and where it is now. Reading a financial statement can be hard to some people but once you learned the basics of financial statement, it will be easy just like reading an electricity, credit card bill or bank statement of account.

In reality, it is not complicated. You can understand financial statement of a company since you know how to read a billing statement of a bank account or from utility companies. It only requires little perseverance when you want to know the basic of financial statement.

So the question is: Why do you need to study financial statement? A financial statement is a documentation of the company’s financial status or condition. It is very helpful for an investor because it will determine if a company is a good investment or not.

A financial statement will tell you whether a company has many assets or many liabilities. It is designed in such a way it is easily understand by common people who are not inclined to complex financial accounting or calculations. It is really simple and usually it is in tabulated form just like any kinds of billing statements.

A financial statement can be separated into four parts: income statements, balance sheets, statements of shareholder’s equity and cash flow statement. Income statement shows how the revenue is converted to net income of the company. On the other hand, balance sheets indicates what a company owns or its assets and liabilities in a particular period.

In a financial statement, a cash flow statement details how cash comes in and out in the balance sheet and income of the company and shows the investing and financing activities of the company. The fourth part is the statement of shareholder’s equity that gives the changes on the company’s shareholders over the time.

In summary, a financial statement is an important instrument to use to determine whether a company is profitable or not in terms of stock investing. It indicates the financial status of a company and details the over-all performance made by the company over a certain time.

Bert Tenorio is a personal finance blogger living abroad. In order to know more information on investing in stocks and mutual funds and how to open Union Bank Philippines bank account, you can visit Financial Management blog for more helpful articles on saving, investing and make money online.