Accounting is the language of business
I’ll teach you the basics of a
- Balance Sheet
- Income Statement
- Cash Flow Statement
In a few minutes.
I’ll teach you the basics of a
- Balance Sheet
- Income Statement
- Cash Flow Statement
In a few minutes.
1. Balance sheet
The balance sheet shows the financial health of a company.
This financial statement reports a company’s assets, liabilities, and shareholder equity at a specific point in time.
Assets = Liabilities + Shareholders' equity
The balance sheet shows the financial health of a company.
This financial statement reports a company’s assets, liabilities, and shareholder equity at a specific point in time.
Assets = Liabilities + Shareholders' equity
Questions to ask yourself:
1️⃣ Does the company have a lot of debt?
2️⃣ How much cash does the company have?
3️⃣ How much goodwill has the company compared to its total assets?
1️⃣ Does the company have a lot of debt?
2️⃣ How much cash does the company have?
3️⃣ How much goodwill has the company compared to its total assets?
2. Income statement
The income statement shows the financial performance of a company over a certain period.
In this statement, you can look at the revenue and expenses of a company.
The income statement shows the financial performance of a company over a certain period.
In this statement, you can look at the revenue and expenses of a company.
Questions to ask yourself:
1️⃣ Is the company already profitable?
2️⃣ Does the company have a lot of costs of goods sold compared to its sales?
3️⃣ How much of the sales are translated into profit (net income)?
1️⃣ Is the company already profitable?
2️⃣ Does the company have a lot of costs of goods sold compared to its sales?
3️⃣ How much of the sales are translated into profit (net income)?
3. Cash Flow Statement
The cash flow statement shows how much money is entering and leaving a company.
The cash flow statement is divided into 3 parts:
- Cash flow from operating activities
- Cash flow from financing activities
- Cash flow from investing activities
The cash flow statement shows how much money is entering and leaving a company.
The cash flow statement is divided into 3 parts:
- Cash flow from operating activities
- Cash flow from financing activities
- Cash flow from investing activities
Questions to ask yourself:
1️⃣ Are most earnings translated into operating cash flow?
2️⃣ Does the company have a positive free cash flow (operating cash flow – CAPEX)?
3️⃣ Did the company manage to increase its cash position compared to last year?
1️⃣ Are most earnings translated into operating cash flow?
2️⃣ Does the company have a positive free cash flow (operating cash flow – CAPEX)?
3️⃣ Did the company manage to increase its cash position compared to last year?
That's it for today.
If you liked this, you'll LOVE my free Financial Analysis course.
Grab it here: compounding-quality.ck.page
If you liked this, you'll LOVE my free Financial Analysis course.
Grab it here: compounding-quality.ck.page
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