Financial statements (or financial reports) are a record of a business’ financial flows and levels.
The big four statements are:
1. Balance sheet which describes a company’s assets and liabilities.
2. Income statement which describes a company’s income and expenses.
3. Statement of Cash Flows which describes how corporate operating, investment, and financing activities have affected the company’s cash position.
4. Statement of Retained Earnings which describes changes to shareholders equity (for example a payment of dividend).
Because these statements are often complex an extensive set of Notes to the Financial Statements and management discussion and analysis is usually included. The notes will typically describe each item on the Balance Sheet and Income statement in further detail. In many cases the notes are much longer than the financial statement they are elucidating.
If a company has extraordinary items that affect the balance sheet or the shareholders equity position it will usually include a Other Comprehensive Income Statement, which describes the adjustments to made. Examples of Other Comprehensive Income include revaluation of corporate assets away from their stated cost, as well as accruals for liabilities. Read the rest of this entry »
