“Is that number in your financial statement only mean a figure for your report?”
Is that number in your financial statement only mean a figure for your report? Know how to interpret the numbers in a company financial statement is an essential skill for every investor. A proper analysis and evaluation for balance sheets, income statements, and cash flow statements will lead to a higher credibility and build trust among the stockholder and stakeholder. However, the diversity of the financial report always become an obstacle and slow down the decision of the investor to step in to your company. In this article well will reveal the “SECRET” financial statement that offers advantage to you or your company.
- Financial Statement are “REPORT CARD”
Yes, financial statement just likes a scorecard that use to record all the score during your study at the education institution. There are tons of the individual investor have chosen reliable fund like mutual fund as the vehicle for their choice of investing activities. This have proven that, investing practices is driven by the trustfulness of the investor to the company. They always seek for the quality companies with strong balance sheets, solid revenue and positive cash flow.
2.What Financial Statement to REFER
Financial statement for a company always refers to a bunch of documents that with all the figures and numbers. However, we will refer to balance sheet, the income statement, and the cash flow statement for the investment analytic purpose. Besides that, also required some additional analysis of a company’s shareholders’ equity and retained earnings. Although income statement and balance sheet always the major concern for the investor, it is important that not to overlook cash flow statement, strong transaction of the cash flow lead to sustainable business.
3. Meaning Behind the NUMBERS
Number in a company financial statement reflect their business; products, services and the fundamental events. These number derived from the statement are easy to understand if you able to imagine the basic quantitative information of the company. For example it is important for you to develop understanding to the company operation, its product/services and the industrial before you study on their company financial statement.
4. Differential of FINANCIAL REPORT
Accounting is an art, not science. Don’t expect financial statement are always come into a single meld. Different industrial of the business will have multiple type and form of the financial statement. Less-experience business owner/investor might get lost when they encounter a presentation of account report that out of the mainstream industrial. Different nature of the business activities results in a diverse set of report presentation. Nonetheless, balance sheet; the income statement and cash flow statement are less susceptible to this phenomenon
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