Custom Search

Thursday, June 4, 2009

Financial Statements Explained

From The Hoss's Mouth

The technical definition of a financial statement goes something like this, depending on which dictionary you use: a written report that quantitatively summarizes the financial status of an individual or organization for a stated period of time.

Why is a financial statement important to the potential investor? It shows you where a company's money came from, where it went, where it is likely to go, and where it is now.

These are statistics any wise investor must know and understand before purchasing stock in a company or even buying a company outright. It is similar to a racing form, which gives the handicapper important information on all horses running in a race and enables him/her to make a selection based on the criteria s/he deems important.

In short, a financial statement enables you to analyze the financial health of any company you are considering for investment purposes and consists of four main parts.

  1. Balance Sheet: Shows at a fixed point in time what a company owns and what a company owes.
  2. Income Statements: These show how much money a company made and how much it spent over a certain period of time.
  3. Cash flow Statement: A summary of cash inflows and cash outflows during an accounting period.
  4. Statement of Shareholders' Equity: Shows what money would be left for the shareholders if a company sold off all its assets and paid off all its liabilities.
financial statement
The Hoss, in the next several postings, will review in detail each of the main parts of a financial statement. He hopes that once you have read all the information you will have a good understanding of the components of a financial statement and be in a position to make wise investment choices.

Stay on track,

The Hoss

Next Hoss Cents Free Financial Money Magazine Post: The Balance Sheet
Previous Post: General Motors Files For Chapter 11 Bankruptcy

0 comments:

Post a Comment

Stock Ticker

Disclaimer

The Hoss is not a financial adviser. This blog is a reflection of his personal opinion, experience and financial choices. For financial assistance, please consult a licensed financial services professional.

The contents of http://free-financial-money-magazine.blogspot.com are provided for informational and entertainment purposes only, and should not be construed as advice. This material is not intended to provide, and should not be construed as providing individual financial, investment, tax, legal or accounting advice.

While the information shared on this website is believed to be accurate and reliable, the owners/operators of this website specifically disclaim all warranties, express, implied or statutory, regarding the accuracy, timeliness, and/or completeness of the information contained herein. Individuals leaving comments on this site are solely responsible and liable for the contents of their comments. Because this website is intended to provide general information only, you should discuss your specific needs with a qualified licensed financial services professional.

Links to other websites are for convenience only, and are independent from http://free-financial-money-magazine.blogspot.com. No liability is assumed for any inaccuracies in the information or for the content of any linked websites. No endorsement or approval of any other products, services or information is expressed or implied by any information, material or content referred to or included on, or linked from or to this website. No liability is assumed for incompatibility, non-suitability, viruses or other destructive/disruptive components on or from such websites.