What Is A Financial Statement?
 
20
shares

What Is A Financial Statement?

Sudhan P
20
shares

Previously, we explored what a bond is.

Now, let’s find out what are financial statements. 

But before that, here’s a quote by the Oracle of Omaha, Warren Buffett, on the subject:

“You have to understand accounting and you have to understand the nuances of accounting. It’s the language of business and it’s an imperfect language, but unless you are willing to put in the effort to learn accounting – how to read and interpret financial statements – you really shouldn’t select stocks yourself.”

The word ‘financial’ may sound intimidating, especially when coupled with the word ‘statement’.

If you are still reading this, congratulations for taking your first step to the world of financial literacy.

Financial statements are records of a company’s financial performance.

They are just like a student’s report card and give an idea of what is going on with a company’s finances.

Financial statements are broken down into the following three segments:

  • Income statement (or profit and loss statement) — shows how much a company has made or lost in any given period.
  • Balance sheet (or statement of financial position) — gives a snapshot in time of the company’s assets, liabilities, and shareholders’ equity.
  • Cash flow statement — shows the company’s ability to generate cash to fund its operations, as well as investments and debt obligations. 

Now that you know the basics of what financial statements are, you can dive deeper into them by clicking on the links above to each of the three different segments.

Have Burning Questions Surrounding The Stock Market?

Why not check out Seedly’s QnA and participate in the lively discussion regarding stocks!

Whether you hate or love our investment content, give us your feedback!

About Sudhan P
It isn't fair competition when only one company in the world makes Monopoly. But I love investing in monopolies. Before joining the Seedly hood, I had the chance to co-author a Singapore-themed investment book – "Invest Lah! The Average Joe's Guide To Investing" – and work at The Motley Fool Singapore as an analyst.
You can contribute your thoughts like Sudhan P here.

Still have more questions after reading the article? Fret not, ask our community here!

Stay updated with the latest finance tips!
Receive bite-sized finance on Telegram here.

What's Popular

    • Loading articles
    • Loading articles
    • Loading articles
    • Loading articles
    • Loading articles
Comments
20
shares

What's Popular

    • Loading articles
    • Loading articles
    • Loading articles
    • Loading articles
    • Loading articles

Still have more questions after reading the article? Fret not, ask our community here!