Types of Financial Statements<\/span><\/h2>\nThere are a few types of financial statements to provide transparency about the financial situation of a company. However, all the types of financial statements are interior linked and show different areas of finance. The three different types of financial statements are enumerated as follows:<\/span><\/p>\nBalance sheet<\/span><\/h3>\nThe balance sheet is a financial report that depicts the financial worth of a company on book value. It consists of three parameters namely organisational assets, liabilities and shareholders\u2019 equity. The concept is to equalise the acids and liabilities of a company to balance the shareholders' equity.\u00a0<\/span><\/p>\nCash and cash equivalents are short-term acids that showcase the operational efficiency and liquidity power of a company. The list of liabilities presents the dead capital of a company and its other expenses. Shareholders' equity consists of investments in equity shares and related investments along with the income from net profit.<\/span><\/p>\nIncome statement<\/span><\/h3>\nThe income statement is a financial report that measures the revenue of an organisation on one side and looks at the list of expenses on the other. It is also known as a profit and loss statement that gives a result as to whether a company has earned profits or made losses in a given period of time. Prophet margin helps businesses to understand whether they are incurring higher or lower operational costs.<\/span><\/p>\nFirstly, the income statement provides the gross profit analysing the revenue and direct costs. Secondly, it evaluates the operating profit by subtracting indirect expenses from gross profit. Lastly, the net income is calculated by detecting various taxes and interest from the operating profit.\u00a0<\/span><\/p>\nCash flow statement<\/span><\/h3>\nA cash flow statement is a financial report that provides the details of only the inflow and outflow of cash and cash equivalents. The net profit is taken over to prepare a cash flow statement about various financial, operating and investment activities that are related to cash.\u00a0<\/span><\/p>\nOperation activities include the cash flow regarding the day-to-day activities of a company. Cashflow regarding investment activities includes all the inflow and outflow of cash concerning various investments. Financial activities include the list of cash flows related to equity and debt financing. The end report shows the amount of cash that remains with the company and will be carried forward to the next accounting year.<\/span><\/p>\n <\/p>\n
Advantages of Financial Statement Analysis<\/span><\/h2>\nFinancial statement analysis helps businesses to grow and lower the chances of losses. The following are the major advantages of financial statement analysis:<\/span><\/p>\n\nIt allows businesses to evaluate the earning capacity of a company and how it can increase its profitability.<\/span><\/li>\nThe use of financial statement analysis makes it easier for companies to assess the effectiveness and ineffectiveness of the management.<\/span><\/li>\nFinancial statement analysis also helps in evaluating the liquidity of an organisation. Liquidity means the ability of an organisation to pay back its current liabilities.<\/span><\/li>\nIt helps to identify the new trends in the financial world and also determine what are the steps required to implement any changes in the organisation regarding financial situations.<\/span><\/li>\nFinancial statements are documents that show the current financial position of a company. Hence, it is easier to attract new investors and funds by showing the analysis reports and proving the company's value.<\/span><\/li>\n<\/ul>\nConclusion<\/span><\/h4>\nFinancial statement analysis and <\/span>financial modelling<\/span> are interlinked, contributing to assessing the financial result of an organisation. It is important for active business persons to be very particular about financial statement analysis that includes various calculations related to financial ratios, determining profit and loss, preparing comparative statements and so on.\u00a0<\/span><\/p>\nIf you want to start your journey as a finance professional and learn a detailed study of financial statement analysis, the <\/span>Financial Analysis Prodegree In Collaboration With KPMG<\/span> course by Imarticus can make your way through it. Sign up for the course to gain all insights about financial statement analysis and its related areas.\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"Financial statement analysis is an integral part of the world of finance. Amateurs may find it tricky and critical to...<\/p>\n","protected":false},"author":1,"featured_media":259832,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[22],"tags":[],"pages":[],"coe":[],"class_list":{"0":"post-259822","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance"},"acf":[],"yoast_head":"\n
A Beginner's Guide to Financial Statement Analysis<\/title>\n \n \n \n \n \n \n \n \n \n \n \n \n\t \n\t \n\t \n \n \n \n\t \n\t \n\t \n","yoast_head_json":{"title":"A Beginner's Guide to Financial Statement Analysis","description":"Delve into A Beginner's Guide to Financial Statement Analysis. Discover Objectives of Financial Statement Analysis","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/imarticus.org\/blog\/a-beginners-guide-to-financial-statement-analysis\/","og_locale":"en_US","og_type":"article","og_title":"A Beginner's Guide to Financial Statement Analysis","og_description":"Delve into A Beginner's Guide to Financial Statement Analysis. 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