INTRODUCTION TO FINANCIAL STATEMENTS at IOB

What is FINANCIAL STATEMENTS?

Financial statements are formal records of the financial activities and position of a business, person, or other entity. Relevant financial information is presented in a structured manner and in a form which is easy to understand.

Overview

The most important financial statement for the majority of users is likely to be the income statement, since it reveals the ability of a business to generate a profit.

Frequently Asked Questions

What means financial statement?

Financial statements are written records that convey the business activities and the financial performance of a company. Financial statements are often audited by government agencies, accountants, firms, etc. to ensure accuracy and for tax, financing, or investing purposes.

What is financial statement and its types?

Financial statements are the statements that present an actual view of the financial performance of an organisation at the end of a financial year.

What are the 3 types of financial statements?

The income statement, balance sheet, and statement of cash flows are required financial statements. These three statements are informative tools that traders can use to analyze a company’s financial strength and provide a quick picture of a company’s financial health and underlying value.

Why are financial statements important?

Financial statements provide a snapshot of a corporation’s financial health, giving insight into its performance, operations, and cash flow. Financial statements are essential since they provide information about a company’s revenue, expenses, profitability, and debt.

What is the objective of financial statements?

The general purpose of the financial statements is to provide information about the results of operations, financial position, and cash flows of an organization. This information is used by the readers of financial statements to make decisions regarding the allocation of resources.

What is financial statement PDF?

A financial statement (or financial report) is a formal record of. the financial activities of a business, person, or other entity.

What are the 4 main financial statements?

There are four main financial statements. They are: (1) balance sheets; (2) income statements; (3) cash flow statements; and (4) statements of shareholders’ equity. Balance sheets show what a company owns and what it owes at a fixed point in time.

What balance sheet means?

Definition: Balance Sheet is the financial statement of a company which includes assets, liabilities, equity capital, total debt, etc.at a point in time. Balance sheet includes assets on one side, and liabilities on the other.

What is capital or equity?

Equity represents the total amount of money a business owner or shareholder would receive if they liquidated all their assets and paid off the company’s debt. Capital refers only to a company’s financial assets that are available to spend.

What are the 3 basic tools for financial statement analysis?

Three common analysis tools are used for decision-making; horizontal analysis, vertical analysis, and financial ratios.

How do financial statements help make decisions?

Financial statements help you keep track of your business, and also provide a snapshot of your financial health. By providing data through a variety of statements, including the balance sheet and income statement, a company can give investors and lenders more power in their decision-making.

What are the two basic financial statements?

A set of financial statements includes two essential statements: The balance sheet and the income statement.

What is financial statement format?

According to the Corporate Finance Institute, the basic financial statement format for an income statement states revenues first, followed by expenses. The expenses are subtracted from the revenue to calculate the net income of the business.

What is profit & Loss?

A profit and loss statement is a record of revenue and expenses incurred by a business in a given period of time. A profit and loss statement is also called a P&L, an income statement, a statement of profit and loss, an income and expense statement, or a statement of financial results.

What is capital fund?

Capital funding is the money that lenders and equity holders provide to a business for daily and long-term needs. A company’s capital funding consists of both debt (bonds) and equity (stock). The business uses this money for operating capital.