The Language of Investing
1. The balance sheet is like a company's credit report because it tells you how much the company owns (assets) relative to what it owes (liabilities)
2. The income statement shows how much the company made or lost in accounting profits during a year or a quarter. Unlike the balance sheet, which is a snapshot of the company's financial health at a precise moment, the income statement records revenues and expenses during a set period, such as a fiscal year.
3. The third key financial statement - the statement of cash flows - records all the cash that comes into a company and all of the cash that goes out.
4. Accural accounting is a key concept for understanding financial statements. The income statement matches sales with the corresponding expenses when a service or a good is provided to the buyer, but cash flow statement is concerned only when cash is received and when it goes out the door
5. The income statement and cash flow statement can tell different stories about a business because they are concerned using differene sets of rules. To get the most complete picture, be sure to look at both.
1. The balance sheet is like a company's credit report because it tells you how much the company owns (assets) relative to what it owes (liabilities)
2. The income statement shows how much the company made or lost in accounting profits during a year or a quarter. Unlike the balance sheet, which is a snapshot of the company's financial health at a precise moment, the income statement records revenues and expenses during a set period, such as a fiscal year.
3. The third key financial statement - the statement of cash flows - records all the cash that comes into a company and all of the cash that goes out.
4. Accural accounting is a key concept for understanding financial statements. The income statement matches sales with the corresponding expenses when a service or a good is provided to the buyer, but cash flow statement is concerned only when cash is received and when it goes out the door
5. The income statement and cash flow statement can tell different stories about a business because they are concerned using differene sets of rules. To get the most complete picture, be sure to look at both.