FINANCIAL

STATEMENTS
 3 MAIN FINANCIAL STATEMENTS
• Balance Sheet Statements
> reports of a company’s financial worth in terms of book value.
a. Assets
b. Liabilities
c. Stakeholder’s equity
• Income Statements
>breaks down the revenue a company earns against the expenses involved in its business
to provide a bottom line, net income profit or loss.
• Cash Flows Statements
> provides an overview of the company's cash flows from operating activities, investing
activities, and financing activities.
 Horizontal Analysis
Free Cash Flows
• Example:
current assets 2008 = $550 000
2007 = $ 533 000 increase(decrease) =$17000
percent = 3.2%
550 000 - 533 000 =$17 000 { $17 000 / 533 000} x 100 = 3.2%
 Income Statement
(Format for Profit & Loss Statements)
 Income Statement
(Format for Profit & Loss Statements)
• It is one of the most important
financial statements showing
company’s position over a
specific accounting period in
terms of expenses and revenues.
It categorizes the sources of
revenue and reasons for
expenses in detail under various
headings.
• Revenue from Operations
- it represents revenue from sales of products and services. In concern of financial companies this
revenue may be in form of interest and financial services.
• Other income
- it consists of the income from interest except for financial companies, net gain or loss on sale of
investments, dividend income and any other non-operating income.
• Expenses
- it is the cost incurred in course of business resulting in outflow of money.
• Material expenses
- it is cost of raw material consumed in production process
• Finance cost
-it includes the interest and other borrowing expenses
• Employee expenses
- it consists of salaries, provident fund, welfare expenses etc.
• Depreciation expense
- it is the amount deducted as an expense with uses of fixed asset losing its value over lifetime