Understanding Financial Statements

And if If you want to be rich and cut down on the risk and have money work for you, you need to think in cash flow & financial statements. Cash flow is what brings you wealth. Cash flow is motion, it keeps you moving forward and gives you momentum.

Financial statements are your report cards...they tell you where a company is now and where they may go in the future.

Financial statements (or financial reports) are formal records of the financial activities of a business, person, or other entity.

All the relevant financial information of a business enterprise, presented in a structured manner and in a form easy to understand, are called the financial statements.

There are four basic types of financial statements:

• Balance sheet: also referred to as statement of financial position or condition, reports on a company's assets, liabilities, and Ownership equity as of a given point in time.
  
  
• Income statement: also referred to as Profit and Loss statement, reports on a company's income, expenses, and profits over a period of time. Profit & Loss account provide information on the operation of the enterprise. These include sale and the various expenses incurred during the processing state.
  
  
• Statement of retained earnings: explains the changes in a company's retained earnings over the reporting period.
  
  
• Statement of cash flows: reports on a company's cash flow activities, particularly its operating, investing and financing activities.

This "Bible" of fundamental analysis has sold over 800,000 copies since its first printing nearly 50 years ago. Here are explanations of every tool imaginable for securities analysis including financial statements analysis, methods to measure asset values and cash flows, profitability and growth ratios, analysis of fixed income securities, and more.

Examples of financial statements are given to help you along with your education of reading financial statements.

Understanding financial statements will not only help you to pick fundamentally sound companies, but also help you manage your own financial well being and your own personal financial statements.


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